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Armenia’s Banking Sector: Provisions for Due Diligence, Depositor Protection, and Bank Secrecy

YEREVAN, ARMENIA - In a bid to ensure transparency and stability in Armenia’s banking sector, the Central Bank of Armenia (CBA) has implemented several key provisions aimed at promoting due diligence, protecting depositors, and maintaining bank secrecy.

Due Diligence and Suspicious Transactions

Banks in Armenia are required to conduct thorough due diligence on transactions and business relationships, reporting any suspicious activities to the CBA. The regulator has identified specific transactions that must be reported, including:

  • Wire transfers exceeding AMD 20 million
  • Cash transactions exceeding AMD 5 million

Banks may also suspend transactions suspected of being linked to terrorism or organized crime.

Depositor Protection

The Deposit Guarantee Fund of Armenia (the “Fund”) is a non-commercial legal entity established by the CBA to protect depositors in case of bank insolvency. The Fund is responsible for managing funds and paying compensation to depositors in the event of a “compensation event.” Depositors are protected up to certain limits, including:

  • AMD 16 million for dram-denominated deposits
  • AMD 7 million for foreign currency-denominated deposits

The guarantee does not apply in certain cases, such as when a depositor is:

  • A bank manager or significant shareholder
  • If the deposit is linked to illegal activities

Bank Secrecy

Armenian banks are subject to strict confidentiality rules regarding customer information. The disclosure of bank secrecy is generally prohibited, and any breach may incur criminal liability. However, there are certain exceptions under which bank secrecy can be disclosed, including:

  • Customer consent
  • Supervision by the CBA or Fund
  • Court order
  • Disclosure to law enforcement agencies
  • Reporting to credit bureaus

The CBA has emphasized the importance of maintaining bank secrecy and has implemented measures to ensure compliance with these rules.

Conclusion

Armenia’s banking sector is subject to a range of provisions aimed at promoting due diligence, protecting depositors, and maintaining bank secrecy. These measures are designed to ensure transparency and stability in the sector, while also protecting the interests of banks and their customers.