Financial Crime World

AZERBAIJAN TIGHTENS BANKING REGULATIONS AGAINST FINANCIAL CRIME

Azerbaijan has established a robust framework to combat money laundering and terrorism financing, with its anti-money laundering (AML) and counter-terrorism financing (CFT) regulations in line with international standards.

Regulatory Framework

The Central Bank of the Republic of Azerbaijan is responsible for ensuring that credit institutions and leasing companies comply with AML/CFT legislation. The bank takes administrative and control measures to ensure that these entities adhere to the requirements.

Compliance with AML/CFT Regulations

Designated service providers must develop and implement a compliance program that includes:

  • Customer Due Diligence: Identify and verify customers and beneficial owners before establishing a business relationship.
  • Ongoing Monitoring: Conduct ongoing due diligence of business relationships, including scrutiny of transactions and updating data collected as part of the customer due diligence process.
  • Politically Exposed Persons (PEPs): Obtain senior management approval for onboarding PEPs from foreign countries.
  • Internal Control Mechanisms: Have strong internal control mechanisms to prevent the legalization of illegally acquired funds and funding terrorism.
  • Internal Audit Process: Establish an internal audit process to ensure compliance with the system.

Azerbaijan has adopted a risk-based approach towards customer due diligence, which is improved and streamlined for various types of customers, business relationships, and transactions. The AML/CFT program should have a defined connection between risk categorization, processes, policies, and controls that address those risks.

AML/CFT Reporting Obligations

As a designated service provider, companies are required to notify FIU-Azerbaijan regarding any suspicious activities and maintain appropriate records:

  • Recordkeeping: Collected information must be held for at least 5 years or more upon request from the relevant supervisory authority.
  • Suspicious Transaction Report (STR): For transactions that raise suspicions or reasonable grounds for suspicion that funds are proceeds of a crime or related to financing terrorism, an STR must be submitted within three business days after receiving the order to execute the transaction.
  • Threshold Reporting: Entities must identify and verify customers and beneficial owners before carrying out occasional transactions above the designated threshold of 15,000 manats.

By implementing these regulations and requirements, Azerbaijan aims to maintain a secure and stable financial environment while preventing money laundering and terrorism financing.