Financial Crime World

Strengthening Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Framework in Armenia

Introduction

Armenia has made significant progress in addressing Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) risks. However, there are still areas that require improvement to strengthen its AML/CFT framework.

Key Areas for Improvement

Risk Assessment

  • The risk assessment conducted by authorities is not comprehensive, and certain risks are not properly identified and assessed.
  • Recommendation: Conduct a comprehensive risk assessment to identify and assess all ML/CFT risks.

Cooperation and Coordination

  • Operational cooperation between competent authorities appears sound, but coordination of strategies within the law enforcement sphere does not seem sufficiently developed.
  • Recommendation: Enhance coordination of strategies within the law enforcement sphere.

Private Sector Understanding

  • The banking sector has a relatively better understanding of risk compared to other sectors, but even in the banking sector, there is a lack of common understanding among financial institutions.
  • Recommendation: Increase awareness and understanding among private sector entities, particularly those with higher risk profiles.

Financial Intelligence

  • The Financial Monitoring Centre (FMC) has access to a broad range of information and can request additional information from reporting entities. However, the quality of Suspicious Transaction Reports (STRs) may be improved by reducing overreliance on typologies and pre-defined indicators.
  • Recommendation: Improve the quality of STRs by reducing overreliance on typologies and pre-defined indicators.

Law Enforcement

  • The availability of certain operative measures to Law Enforcement Agencies (LEAs) is subject to burdensome conditions, limiting their ability to broaden the scope of an investigation.
  • Recommendation: Simplify or eliminate burdensome conditions for LEAs to access operative measures.

Intelligence Use

  • There is little evidence that intelligence generated by the FMC or LE operative units is used to identify ML and conduct financial investigations.
  • Recommendation: Utilize intelligence more effectively to identify ML and conduct financial investigations.

Prosecution

  • The authorities have increased efforts in identifying ML offences, but there is a limited potential for identifying ML cases due to the lack of proactive parallel financial investigations.
  • Recommendation: Implement proactive parallel financial investigations, particularly in relation to major proceeds-generating crimes.

Asset Recovery

  • Armenia does not appear to pursue the seizure and confiscation of criminal proceeds, instrumentalities, and property of equivalent value as actively as it should.
  • Recommendation: Enhance asset recovery efforts by pursuing the seizure and confiscation of criminal proceeds, instrumentalities, and property of equivalent value.

Conclusion

By addressing these areas, Armenia can strengthen its AML/CFT framework and improve its ability to prevent and combat ML and CFT. Implementing these recommendations will enhance the country’s resilience against financial crimes and promote a safer and more secure financial environment.