Financial Crime World

Azerbaijan: Strengthening Customer Identity Verification for Monitoring Entities

The Azerbaijani government has introduced new measures to enhance customer due diligence (CDD) requirements for monitoring entities operating in the country.

New Regulations for Monitoring Entities

According to a recent amendment to Azerbaijan’s anti-money laundering law, monitoring entities are now required to:

  • Identify and verify customers and beneficial owners in various scenarios, including:
    • Before establishing business relationships
    • Carrying out occasional transactions above a designated threshold
    • Wire transfers regardless of amount
    • Suspected cases of money laundering or terrorism financing
  • Verify the identity of individuals acting on behalf of customers
  • Determine who ultimately owns or controls legal entities

Verification Process

To verify customer identities, monitoring entities must:

  • Use reliable sources, including:
    • State registers
    • Mass media
    • Internet
    • Official publications
  • Obtain sufficient identification data to confirm the identity of beneficial owners

Ongoing Due Diligence

In addition to the initial verification process, monitoring entities are required to conduct ongoing due diligence on business relationships, including:

  • Reviewing transactions
  • Ensuring that documents and information collected during the CDD process remain up-to-date and relevant

Enhanced Due Diligence for Higher-Risk Customers and Transactions

The new regulations apply enhanced due diligence requirements for higher-risk customers, business relationships, or transactions, such as:

  • Non-resident customers
  • Legal entities with nominee shareholders or bearer shares
  • Correspondent banking relationships
  • Transactions specified by the government

Objectives and Consequences

The measures are aimed at preventing money laundering and terrorism financing in Azerbaijan and ensuring compliance with international standards. Monitoring entities that fail to comply with the new regulations may face penalties and fines.

By strengthening customer identity verification, Azerbaijan is taking a crucial step towards maintaining financial stability and integrity. The new regulations will help prevent illicit activities and ensure a safer and more transparent financial environment for all stakeholders.