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Liquidity Manager Appointed, But Breaches Legislation

Armenia’s Central Bank (CBA) has appointed a new liquidity manager for one of its leading banks, but sources close to the matter have revealed that the manager has already breached several key regulations.

Remuneration Practices

According to insiders, the manager failed to comply with the requirements outlined in Armenian legislation regarding remuneration practices. The CBA had imposed strict limits on bonus payments and incentive schemes to prevent financial instability.

Lack of Experience

Furthermore, the manager’s appointment was met with skepticism by industry experts due to their lack of experience in managing a bank’s liquidity. This raises concerns about their ability to effectively manage the bank’s finances.

AML/KYC Failures

In another disturbing revelation, the same bank has been found to be non-compliant with Anti-Money Laundering (AML) and Know-Your-Customer (KYC) regulations.

• The bank failed to conduct adequate customer due diligence and risk assessments.
• Its KYC processes were also found to be inadequate, leading to suspicious transactions going unreported.

This lack of transparency has raised concerns about the bank’s vulnerability to money laundering and terrorist financing.

Depositor Protection Regime

In a related development, Armenia’s Deposit Guarantee Fund (DGF) has been criticized for its inability to effectively protect depositors in the event of a bank failure. The DGF is responsible for ensuring that depositors receive compensation up to a certain limit in the event of a “compensation event”.

• However, sources have revealed that the fund’s management has been plagued by inefficiencies and lack of transparency.
• This has left many depositors feeling uncertain about their financial security.

Board Member Fails CBA Interview

In yet another blow to the bank’s reputation, one of its long-serveing board members failed an interview with the CBA. The board member had served on the bank’s governing body for five years before being subjected to a rigorous examination by regulators.

• The CBA has strict requirements for board members, including expertise in banking and finance, as well as integrity and ethics.
• It remains unclear why the board member was unable to meet these standards, but it is likely to raise concerns about the bank’s overall governance and management.

Conclusion

These developments have raised serious questions about the bank’s ability to operate effectively and maintain the trust of its customers and regulators. The CBA has a duty to ensure that all banks operating in Armenia are compliant with relevant regulations and standards, and it is clear that this bank has failed to meet these expectations.

It remains to be seen what action will be taken by the CBA to address these concerns, but one thing is certain: the financial stability of Armenia’s banking sector must be a top priority for regulators.