Financial Crime World

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Anti-Money Laundering Laws in Azerbaijan Under Scrutiny

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Azerbaijan has been rated as “largely compliant” with the technical requirements of the Financial Action Task Force (FATF) Recommendations, according to a recent report. The country has implemented many of the measures necessary to prevent money laundering and terrorist financing, but there are still some areas that require improvement.

Compliance with FATF Recommendations

The FATF Recommendations provide a framework for countries to combat money laundering and terrorist financing by implementing technical requirements and best practices. Azerbaijan’s compliance with these recommendations was assessed in the Benin Follow-Up Report 2023, which evaluated the country’s progress in implementing anti-money laundering measures.

Areas of Compliance

  • Assessing risk and applying a risk-based approach (R.1)
  • National cooperation and coordination (R.2)
  • Money laundering offense (R.3)
  • Confiscation and provisional measures (R.4)
  • Terrorist financing offense (R.5)
  • Targeted financial sanctions related to terrorism and terrorist financing (R.6)
  • Targeted financial sanctions related to proliferation (R.7)

Areas for Improvement

  • Preventing money laundering through non-profit organizations (R.8)
  • Financial institution secrecy laws (R.9)
  • Customer due diligence (R.10)
  • Record keeping (R.11)
  • Politically exposed persons (R.12)
  • Combating terrorist financing through correspondent banking (R.13) and money or value transfer services (R.14)

Progress Made

The report also notes that Azerbaijan has made progress in implementing measures to prevent money laundering and terrorist financing through new technologies (R.15), wire transfers (R.16), reliance on third parties (R.17), internal controls and foreign branches and subsidiaries (R.18), higher-risk countries (R.19), reporting of suspicious transactions (R.20), tipping-off and confidentiality (R.21), DNFBPs: customer due diligence (R.22), DNFBPs: other measures (R.23), transparency and beneficial ownership of legal persons (R.24), and transparency and beneficial ownership of legal arrangements (R.25).

Future Steps

Azerbaijan has also made progress in implementing measures to regulate and supervise financial institutions (R.26), powers of supervisors (R.27), regulation and supervision of DNFBPs (R.28), financial intelligence units (R.29), responsibilities of law enforcement and investigative authorities (R.30), powers of law enforcement and investigative authorities (R.31), cash couriers (R.32), statistics (R.33), guidance and feedback (R.34), sanctions (R.35), international instruments (R.36), mutual legal assistance (R.37), mutual legal assistance: freezing and confiscation (R.38), extradition (R.39), and other forms of international cooperation (R.40).

Conclusion

While Azerbaijan has made progress in implementing anti-money laundering measures, there are still some areas that require improvement. The country’s authorities will need to continue working to strengthen its anti-money laundering framework and ensure that it is fully compliant with the FATF Recommendations.