BRUSSELS — In a new report, the Council of Europe’s anti-money laundering body, MONEYVAL, commends Armenia’s efforts to strengthen its understanding of money-laundering and terrorist-financing risks. It considers the country’s national policies and strategies for addressing these risks to be satisfactory.
The main money-laundering threats identified by the Armenian authorities stem from fraud, embezzlement, corruption, tax crimes, drug trafficking, and cybercrime. However, MONEYVAL calls for more in-depth analysis of foreign threats, terrorist financing, and risks associated with virtual assets.
The report also finds that further improvements are needed in assessing risks in the real estate sector and strengthening operational cooperation mechanisms.
Armenia’s legal framework for international cooperation is considered sound, and the country generally provides timely, high-quality assistance. The report notes Armenia’s proactive approach to seeking cooperation with foreign counterparts, particularly in corruption cases. However, this approach is not applied systematically to other offences, such as drug trafficking. Mutual legal assistance is also used to some extent in asset recovery efforts.
Controls in the Financial Sector
The report positively assesses the controls in place to prevent criminals and their associates from entering the regulated financial sector. It also recognizes the financial supervisor’s understanding of money-laundering and terrorist-financing risks.
Further steps are needed, however, to strengthen the supervision of virtual asset service providers and non-public investment funds, which were recently brought under regulation.
The supervision of designated non-financial businesses and professions has demonstrated limited effectiveness. Few sanctions or remedial measures have been imposed, and those applied were not sufficiently dissuasive.
Armenian authorities have identified limited liability companies, closed joint-stock companies, and, in some cases, nonprofit organizations as the legal entities most frequently involved in criminal activities.
A multifaceted approach is used to obtain beneficial ownership information, but additional measures are needed to ensure transparency. These include completing the beneficial ownership register and verifying that the information it contains is accurate and up to date.
Financial Intelligence and Legal Framework Assessed
The report commends Armenia’s Financial Intelligence Unit for expanding its human and information technology resources, maintaining broad access to data, and providing high-quality intelligence to law enforcement authorities.
Nevertheless, both the volume and quality of suspicious activity reports submitted by the private sector must be improved. MONEYVAL also calls on investigative authorities to place greater emphasis on the money-laundering aspects of criminal investigations.
Reforms to Armenia’s legal and institutional framework have led to an increase in money-laundering investigations and prosecutions, particularly in corruption-related cases. However, the system remains predominantly driven by associated offences, with a focus on self-laundering connected to crimes committed within Armenia.
The restrictive interpretation of the money-laundering offence limits the number of prosecutions, while the number of convictions remains low.
Concerns Over Criminal Asset Recovery
Despite significant efforts to establish a legal and institutional framework for asset recovery, the results achieved in seizing and confiscating criminal proceeds do not demonstrate that asset recovery is being consistently pursued as a policy objective.
The introduction of a civil forfeiture regime has strengthened Armenia’s ability to confiscate illicit assets. Nevertheless, MONEYVAL calls for a comprehensive review of the asset recovery framework at every stage of the process, along with greater expertise and resources for tracing, seizing, and confiscating criminal proceeds.
Although there have been no prosecutions or convictions for terrorist financing, the necessary legal and institutional framework is in place.
Concerns remain about the consistent identification of terrorist-financing activities, particularly when funds are raised through associated criminal conduct. The report points to insufficient use of available information and the underreporting of terrorist-financing suspicions by the private sector.
MONEYVAL positively assesses Armenia’s robust framework and effective coordination mechanisms for implementing targeted financial sanctions related to terrorism and proliferation financing. It also acknowledges the country’s risk-based oversight of nonprofit organizations.
Following the assessment, Armenia received a roadmap of key recommended measures to be completed within three years. Based on the effectiveness and technical compliance ratings it received, Armenia has been placed under an enhanced follow-up process and is required to report back to MONEYVAL on its progress.
