Azerbaijan’s Financial Crime Reporting Requirements: An Overview
(Baku) – In a significant move to combat financial crime, the government of Azerbaijan has implemented new reporting requirements for financial institutions. Here’s what you need to know.
New Regulations from the Azerbaijani Financial Crimes and Anti-corruption Open Joint Stock Company (FCA)
The Azerbaijani FCA - the country’s primary anti-corruption agency - recently issued new regulations that mandate financial institutions to report suspicious transactions and other financial crimes to the agency. These new requirements came into effect on January 1, 2023.
Reporting Requirements for Financial Institutions
According to the new guidelines, financial institutions are now required to report any transaction or set of related transactions that exceeds the equivalent of €15,000 within a 24-hour period. The threshold for complex and unusual transactions is set at €30,000. Failure to meet these reporting requirements could result in penalties ranging from fines to potential license revocation.
Other Key Provisions of the New Regulations
The FCA’s new regulations include the following provisions:
- Customer due diligence: Financial institutions must follow due diligence procedures to verify the identity of their customers before opening an account or conducting transactions.
- Enhanced scrutiny of politically exposed persons (PEPs): Financial institutions must take extra measures to identify and assess the risks associated with transactions involving PEPs.
- National risk assessment framework: The establishment of a framework to help financial institutions prioritize areas and customers with higher risks and allocate resources accordingly.
Ongoing Efforts to Enhance Financial Regulatory Framework
These new measures add to the Azerbaijani government’s ongoing efforts to enhance its financial regulatory framework and meet international standards. In 2019, Azerbaijan was removed from the European Commission’s list of high-risk third countries in terms of money laundering and terrorism financing.
However, concerns remain about the country’s susceptibility to financial crimes, particularly those involving organized crime and corruption. In the 2021 Corruption Perceptions Index ranked Azerbaijan 125th out of 180 countries. To combat corruption, the government has also taken steps to increase transparency in public procurement, reform the judiciary, and tackle political influence in the business sector.
Compliance with the New Regulations
Financial institutions are advised to familiarize themselves with the new regulations and ensure they are prepared to comply with them to avoid potential penalties and reputational damage.
In the coming weeks, further updates will be provided on the implementation and enforcement of these requirements. Stay tuned for more information on this developing story.