Financial Crime World

Bank Manager Appointed Amidst Breaches of Legislation

Yerevan, Armenia - A Shocking Turn of Events

In a surprising move, the Central Bank of Armenia (CBA) has appointed a new manager for a local bank despite several breaches of legislation. The newly appointed manager failed to comply with the requirements defined for a person to be appointed as a manager and also breached legislation on remuneration, leading to a decline in the bank’s financial condition.

Breaches of Legislation

  • The newly appointed manager did not meet the requirements defined for a person to be appointed as a manager.
  • The manager was found to have breached legislation on remuneration, leading to a decline in the bank’s financial condition.
  • Another board member of the same bank failed an interview with the CBA after serving for five years in the institution.

Remuneration Requirements

The CBA has adopted regulations regarding remuneration, which state that it may limit a bank’s payment of bonuses and other incentive payments in certain circumstances. These include cases where:

  • The payment leads or may lead to a decline in the bank’s financial condition.
  • There have been breaches or potential breaches of prudential standards.

AML/KYC Requirements

The bank is required to adhere to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations, including:

  • Conducting customer due diligence
  • Reporting suspicious transactions
  • Freezing assets owned by persons related to terrorism or the proliferation of weapons of mass destruction

Depositor Protection

The Deposit Guarantee Fund of Armenia is responsible for managing funds and paying compensation in cases where a bank becomes insolvent or bankrupt. The fund covers deposits up to certain limits, including:

  • AMD16 million for Armenian dram-denominated deposits
  • AMD7 million for foreign currency-denominated deposits

However, the compensation guarantee does not apply in certain circumstances, such as:

  • When a depositor is a manager or significant shareholder of the bank
  • When the deposit is recognized as proceeds of illegal activities

Concerns Over Bank’s Management

The recent developments have raised concerns over the bank’s management and ability to maintain prudential standards. The CBA has taken measures to address these issues, but it remains to be seen whether the bank can recover from its current difficulties.

Advice for Depositors

As the situation unfolds, depositors are advised to exercise caution and monitor their accounts closely. The CBA will continue to work with the bank to ensure that it complies with all relevant regulations and maintains the confidence of its customers.