Financial Crime World

Armenian Banks Must Adhere to Stricter Regulations on Anti-Money Laundering, Know-Your-Customer and Bank Secrecy

The Armenian Central Bank has issued new guidelines for commercial banks operating in the country to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. These rules aim to prevent the misuse of financial systems by terrorists, organized crime groups, and other malicious actors.

Strengthened AML/CFT Regulations

The new regulations require commercial banks to:

  • Conduct due diligence on all transactions and business relationships
  • Report suspicious transactions to the regulator in a timely manner
  • Freeze assets linked to terrorism or weapons of mass destruction
  • Reject or cease any transaction that cannot be verified through Know-Your-Customer (KYC) procedures or where there are reasonable grounds to suspect criminal activity

Depositor Protection

The Armenian Deposit Guarantee Fund has been established to protect depositors in the event of a bank’s insolvency or bankruptcy. The fund provides compensation to depositors up to certain limits, which vary depending on the type of deposit and currency denomination.

Bank Secrecy

The new regulations emphasize the importance of maintaining bank secrecy, with banks prohibited from disclosing customer information unless authorized by law or court order. However, there are certain exceptions, such as when a customer consents to disclosure or where disclosure is necessary for the provision of services or activities related to banking.

Consequences of Non-Compliance

Banks that fail to comply with these regulations may face severe penalties, including fines and even criminal liability.

Key Highlights

  • Commercial banks must conduct due diligence on all transactions and business relationships
  • Banks must report suspicious transactions to the regulator and freeze assets linked to terrorism or weapons of mass destruction
  • Depositors are protected by the Armenian Deposit Guarantee Fund up to certain limits
  • Bank secrecy is emphasized, with disclosure only allowed under specific circumstances
  • Banks that fail to comply with regulations may face severe penalties

The new regulations aim to strengthen Armenia’s AML/CFT framework and prevent the country from being used as a conduit for illicit funds. This move is also expected to boost investor confidence in the Armenian financial system and improve the overall stability of the banking sector.