Armenia’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Framework: Areas for Improvement

Key Findings

• Improvement Needed: While Armenia has made progress in its AML/CFT framework, there is still room for improvement to meet international standards.
• Small Financial System: Armenia’s financial system remains small and bank-dominated.

Vulnerabilities Identified

• Highly Cash-Based Economy: The country’s economy is highly cash-based, making it vulnerable to money laundering (ML).
• Significant Remittances: Significant remittances from abroad increase the risk of ML.
• Crime-Generated Proceeds: Relevant levels of crime-generated proceeds also contribute to the risk of ML.

Low Risk of Terrorism Financing

• The risk of terrorism financing is extremely low in Armenia.

Challenges and Deficiencies

• Understaffed Financial Intelligence Unit (FIU): The Financial Monitoring Center, Armenia’s FIU, is understaffed to handle its new responsibilities.
• AML/CFT Laws and Regulations: While some provisions are sound, there are deficiencies in:
  • Criminalizing money laundering offenses
  • Confiscation of property involved in ML
  • Terrorism financing offenses

Implementation Challenges

• The country faces challenges in implementing preventive measures for all financial institutions, including risk-based elements and sector-specific guidelines.

Recommendations for Improvement

To strengthen its AML/CFT framework and meet international standards, Armenia should address these areas of concern.