Financial Crime World

Azerbaijan’s Anti-Money Laundering and Counter-Terrorist Financing System: Assessment Report

Executive Summary

This report assesses Azerbaijan’s anti-money laundering (AML) and counter-terrorist financing (CFT) system. The assessment highlights both positive and negative aspects of the country’s efforts in this area.

Key Findings

Risk Assessment

  • Azerbaijan has a good understanding of its money laundering (ML) risks, which include domestic corruption, tax-related crimes, and drug smuggling.
  • However, there is still room for improvement in analyzing links with organized crime and misuse of legal persons.
  • The country has a robust legal framework to prevent ML/TF, but technical improvements are needed in supervision, sanctions, and transparency of legal persons.

Coordination

  • Azerbaijan’s Coordination Council demonstrates adequate coordination at the policy level but could benefit from greater cooperation at the operational level.

Financial Intelligence

  • Law Enforcement Agencies (LEAs) gather financial intelligence during predicate crime investigations.
  • However, they rarely use the Financial Monitoring System (FMS) for ML cases due to low-quality Suspicious Transaction Reports (STRs), varying appetite for investigation, and preference for direct private sector information.

Supervision

  • Supervision over Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) is negligible.

International Cooperation

  • Azerbaijan has made efforts to improve international cooperation but still faces challenges in tracing, seizing, and confiscating assets moved abroad.

Real Estate Supervision

  • There are concerns about the ability of criminals to utilize undocumented immovable property in ML schemes.
  • Despite positive legislation changes, there is a need for more effective implementation.

National Action Plans

  • Azerbaijan has adopted three National Action Plans as a result of its risk assessments, demonstrating political commitment to addressing ML/TF risks and vulnerabilities.

Technical Level

  • There have been positive results from technical efforts but lack implementation of effective actions beyond legislative changes in some instances.

Assessment Conclusion

Azerbaijan’s AML/CFT system has made progress but still faces challenges that need to be addressed to ensure the effectiveness of its ML/TF prevention measures.