Financial Crime World

Anti-Money Laundering Regulations in Azerbaijan Need Strengthening to Combat Financial Crimes

The fight against money laundering and terrorist financing has become a major concern globally, with many countries implementing strict anti-money laundering (AML) regulations. However, despite its efforts, Azerbaijan’s AML legal framework still lacks critical components that could strengthen the country’s ability to detect and prevent financial crimes.

Gaps in Azerbaijan’s AML Laws

According to experts, one of the main gaps in Azerbaijan’s AML laws is the exclusion of certain industries from the list of covered entities. The following sectors are not subject to the same level of scrutiny as other financial institutions:

  • Dealers of arts, antiques, and high-value consumer goods
  • Entities dealing with jewelry and precious metals
  • Travel agencies
  • Auto dealers

To address this issue, Azerbaijan’s authorities need to strengthen its AML/Combating the Financing of Terrorism (CFT) legal framework by expanding the scope of covered entities. This would help prevent the misuse of these sectors for money laundering and terrorist financing purposes.

Enhancing Law Enforcement Capacities and International Cooperation

Azerbaijan’s Financial Monitoring Service under the Central Bank is responsible for implementing AML/CFT measures, but experts argue that it needs additional resources to effectively carry out its duties. The agency requires more staff, training, and technology to detect and investigate suspicious transactions.

The Ministry of Internal Affairs and State Border Service also play a crucial role in combating financial crimes, but their capacities need to be enhanced to keep pace with the evolving nature of money laundering and terrorist financing threats.

Improving AML Compliance Risk

To improve AML compliance risk, Azerbaijan can take several steps:

  • Strengthening its AML/CFT legal framework
  • Enhancing the capacity of law enforcement agencies
  • Improving international cooperation

Designated Service Providers’ Responsibilities

Designated service providers in Azerbaijan must also develop and implement a robust compliance program with a rigorous anti-money laundering counter-terrorism financing policy in place. This includes:

  • Conducting regular risk assessments to identify potential money laundering and terrorist financing risks

Raising Awareness and Providing Training

Raising awareness and providing training to relevant stakeholders about AML/CFT measures is also essential to prevent financial crimes.

Conclusion

While Azerbaijan has made significant progress in combating financial crimes, there is still much work to be done. Strengthening its AML legal framework, enhancing law enforcement capacities, and improving international cooperation are critical steps towards preventing money laundering and terrorist financing. By taking these measures, Azerbaijan can ensure that non-fungible tokens (NFTs) are used in accordance with their purpose, namely in the field of art.