Armenia’s Banking System: A Look at Key Regulatory Requirements
The Armenian banking system is governed by a range of regulatory requirements aimed at ensuring its stability, security, and integrity. In this article, we’ll take a closer look at five key aspects of these regulations.
Anti-Money Laundering (AML) and Know Your Customer (KYC)
Banks in Armenia are required to adhere to the Law on Combating Money Laundering and Terrorist Financing, as well as recommendations issued by the Central Bank of Armenia (CBA) and international institutions. This means that banks must have internal policies and procedures in place to prevent money laundering and terrorist financing.
Some key requirements include:
- Conducting customer due diligence at the initiation of a business relationship and during ongoing service provision
- Evaluating potential risks associated with transactions and business relationships
- Reporting suspicious transactions and suspending or terminating business relationships if necessary
- Freezing assets linked to terrorism or weapons proliferation
Depositor Protection: A Safety Net for Customers
The Deposit Guarantee Fund of Armenia is a non-commercial entity established by the CBA to provide protection to depositors in case of bank insolvency. All banks are required to contribute to the fund, and the amount of each contribution is calculated based on the bank’s total attracted deposits.
In the event of a compensation event, such as a bank being declared insolvent or bankrupt, the Fund will pay out compensation to eligible depositors up to a certain limit.
Bank Secrecy: A Crucial Aspect of Banking
Bank secrecy is a fundamental aspect of banking, and banks are prohibited from disclosing customer information without permission. The disclosure of bank secrecy can result in civil liability, administrative penalties, and criminal liability.
However, there are certain circumstances under which the disclosure of bank secrecy may be allowed, such as with the customer’s consent or when required by law.
Other Key Requirements
In addition to AML/KYC, depositor protection, and bank secrecy, banks in Armenia must also comply with other regulatory requirements. These include:
- Conducting risk assessments and implementing measures to mitigate identified risks
- Maintaining accurate records and reporting suspicious transactions to the CBA
- Complying with anti-competitive practices regulations
Conclusion
The Armenian banking system is subject to a range of regulatory requirements aimed at ensuring its stability, security, and integrity. By complying with these requirements, banks can help maintain public trust and confidence in the financial system.
As the banking landscape continues to evolve, it’s essential for banks to stay up-to-date with changing regulations and best practices. By doing so, they can ensure that their operations are secure, efficient, and transparent, ultimately benefiting both customers and stakeholders.