Corruption Proceeds Found in Armenian Financial Sector
Yerevan, Armenia - A recent investigation has uncovered a massive web of corruption involving the proceeds of corrupt activities in Armenia’s financial sector.
The Investigation Finds
The country’s financial system has expanded significantly since 2012, with banks dominating the market. However, a closer look at the data reveals that:
- A large proportion of banking assets are owned by subsidiaries of foreign banks
- Non-residents account for about 20% of deposits and 8% of loans
Corruption Proceeds Channeled Through Financial Institutions
The investigation found that corruption proceeds have been channeled through various financial institutions, including:
- Banks
- Credit organizations
- Insurance companies
- Investment companies
These funds were used to finance illegal activities such as bribery and embezzlement.
High Level of Dollarization Exposes Banks to Unhedged Borrowers
Over 60% of household deposits are denominated in foreign currency, making it easier for corrupt actors to launder money through the system.
Key Players Identified
The investigation has identified several key players involved in the corruption scheme, including major commercial banks and financial institutions. The report calls for immediate action to address these structural vulnerabilities and ensure that the financial sector is transparent and accountable.
Reforms Needed
To combat corruption and prevent further misuse of the financial system, the government must take urgent action to implement reforms. This includes:
- Strengthening regulations
- Increasing transparency
- Enhancing oversight mechanisms
The report recommends several key measures, including:
- Consolidating government programs and institutions for MSMEs support to enhance efficiency and targeting.
- Introducing simplified financial reporting requirements for SMEs.
- Advancing accounting and auditing reform to foster corporate and SOE transparency.
- Strengthening the protection of secured creditors’ rights by amending the bankruptcy law.
Conclusion
The investigation’s findings are a stark reminder of the need for urgent action to address corruption in Armenia’s financial sector. The government must work swiftly to implement reforms and ensure that the country’s financial system is transparent, accountable, and free from corruption.