Armenia’s Illicit Economy: A Lucrative but Fragmented Scene

A Complex Issue

Despite efforts to reform, Armenia remains plagued by a lucrative illegal economy that is fragmented and limited in scope. The country’s criminal networks, often referred to as “akhperutyuns,” have declined in membership since 2018, but remnants of organized crime groups still exert influence over certain markets.

Limited Scope, Significant Challenges

Experts say the activities of Armenian criminal networks are largely restricted due to a lack of resources and the country’s status as a transit hub for illicit trade. However, a small number of “thieves in law” - professional criminals with elite positions within organized crime groups - remain active, primarily controlling criminal markets.

Corruption Remains Widespread

A major challenge facing Armenia is its struggle against corruption, which remains widespread despite efforts to improve transparency and accountability. The country’s political leadership is still heavily influenced by Russia, and state-embedded corruption has raised concerns about cronyism and influence peddling.

Judicial System Faces Challenges

Armenia’s judicial system also faces significant challenges, with a lack of independence and corruption within the judiciary. The penitentiary system is plagued by reports of torture, ill-treatment, and prisoner abuse, while law enforcement agencies are often hampered by limited resources and low salaries.

Economic Environment Marked by Challenges

The country’s economic environment is also marked by significant challenges, including:

• Money laundering risks within its banking system
• A high risk of terrorism financing
• About half of Armenia’s workers remaining employed in the informal sector, making them vulnerable to exploitation

Limited Civil Society and Media Landscape

Civil society organizations in Armenia are limited in their ability to address issues related to policing, criminal justice, and organized crime due to lack of funding and resources. The media landscape is also polarized, with recent incidents of physical violence against journalists threatening basic international media freedom standards.

Uncertain Future

As Armenia continues to grapple with these challenges, it remains unclear whether the country can make significant progress in combating its illicit economy and promoting transparency and accountability.