Financial Crime World

Evaluating Armenia’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Framework

Armenia has made significant strides in implementing its AML/CFT regime, but a recent evaluation report highlights several strengths and weaknesses that need to be addressed.

Strengths of Armenia’s AML/CFT Regime

  • Effective Coordination Mechanism: Armenia has established an Interagency commission that boosts coordination among various authorities responsible for AML/CFT.
  • Strong Political Commitment: The government is committed to fighting against money laundering and terrorism financing, demonstrating a strong political will to address these issues.
  • Knowledgeable Financial Intelligence Unit (FIU): The Financial Monitoring Center, established within the Central Bank of Armenia, is a young but active FIU that plays a crucial role in monitoring financial transactions.
  • Comprehensive AML/CFT Measures: Armenia’s preventive measures for financial institutions operating in the financial system are comprehensive and provide for risk-based elements.

Weaknesses of Armenia’s AML/CFT Regime

  • Vulnerability to Money Laundering: Armenia is vulnerable to the “integration” stage of money laundering due to its highly cash-based economy, significant volume of remittances from abroad, relevant level of proceed-generating crime, and lack of adequate AML/CFT mechanisms in certain sectors.
  • Risk Assessment: The report suggests that more focus should be placed on an overall assessment of the risk of money laundering Armenia is exposed to due to the above-mentioned vulnerabilities.
  • Low Risk of Terrorism Financing: The risk of terrorism financing is extremely low in Armenia, but this does not mean that adequate measures are not needed to prevent and detect it.
  • Technical Deficiencies: There are technical deficiencies with respect to the terrorism offense, which need to be addressed.
  • Ineffective Seizure and Confiscation Provisions: The seizure and confiscation provisions do not seem to be implemented effectively.
  • Non-Compliance with FATF Recommendations: There are several areas where the AML/CFT requirements for financial institutions do not comply with the FATF recommendations.

Conclusion

While Armenia has made progress in implementing its AML/CFT regime, there are still several weaknesses that need to be addressed in order to strengthen the country’s ability to prevent and detect money laundering and terrorism financing. By addressing these issues, Armenia can further enhance its AML/CFT framework and reduce the risks associated with money laundering and terrorism financing.