Illicit Financial Flows in Armenia: An Overview and Challenges

Introduction

Illicit Financial Flows (IFFs) pose significant challenges for Armenia. Between 2011 and 2019, IFFs exceeded AMD 3 trillion (approximately USD 6.2 billion), equivalent to about 30% of Armenia’s GDP during the same period.

Main Drivers of IFFs in Armenia

• Corruption: Widespread corruption within government agencies, law enforcement, and the judiciary enables money laundering and other forms of illicit financial activity.
• Lack of regulation: Inadequate legislation and lack of effective enforcement mechanisms allow criminals to operate with relative impunity.
• Economic instability: Armenia’s economy has been subject to fluctuations, including a severe economic crisis in 2018, which may have contributed to an increase in IFFs.

Efforts to Combat IFFs

To combat IFFs, Armenia has taken several steps:

Anti-Money Laundering (AML) Laws and Regulations

• Armenia has implemented AML laws and regulations, including the adoption of the International Organization for Standardization (ISO) 20022 standard for financial messaging.

Financial Intelligence Unit (FIU)

• The FIU is responsible for analyzing suspicious transactions and reporting them to law enforcement agencies.

International Cooperation

• Armenia has strengthened its international cooperation with countries such as Russia, Belarus, and Kazakhstan to combat IFFs.

Challenges Remaining

Despite these efforts, challenges remain:

• Limited resources: Armenian authorities face significant challenges in terms of resources, including funding, personnel, and technology.
• Corruption: Corruption within the government and law enforcement agencies remains a significant obstacle to effective anti-IF action.
• Lack of public awareness: Many Armenians are not aware of the risks associated with IFFs or how to report suspicious activities.

Addressing Challenges

Addressing these challenges will require sustained efforts from Armenian authorities, international partners, and civil society.