Anti-Money Laundering Regulations in Azerbaijan
In Azerbaijan, the relations related to the detection and prevention of the legalization of property obtained through crime and the financing of terrorism are regulated by the Anti-Money Laundering Law. However, there is a gap in the anti-money laundering legal framework that excludes dealers of arts, antiques, and other high-value consumer goods, entities dealing with jewelry and precious metals, travel agencies, and auto dealers from the list of covered entities.
Azerbaijan’s AML Authorities:
In Azerbaijan, the Financial Monitoring Service under the Central Bank of Azerbaijan is responsible for the implementation of AML/CFT measures. The Financial Monitoring Service is an independent government agency responsible for monitoring financial transactions, investigating suspicious activities, and enforcing regulations related to AML/CFT. It can impose administrative sanctions and penalties on financial institutions that fail to comply with AML/CFT regulations. The agency also acts as the country’s Financial Intelligence Unit (FIU), receiving and analyzing suspicious transaction reports from financial institutions, law enforcement agencies, and other government agencies.
The Ministry of Internal Affairs of Azerbaijan and the State Border Service are also involved in AML/CFT efforts. The Ministry of Internal Affairs investigates and prosecutes money laundering and terrorism financing cases. At the same time, the State Border Service is responsible for controlling the country’s borders to prevent the movement of illicit funds and activities.
Can Azerbaijan’s AML Compliance Risk be Improved?
Azerbaijan’s AML compliance risk can be improved through various measures. One way to improve compliance is by strengthening the legal framework. Specifically, the AML/CFT law could be amended to include dealers of arts, antiques, and other high-value consumer goods, entities dealing with jewelry and precious metals, travel agencies, and auto dealers. This would expand the scope of entities covered by the law and help prevent the misuse of these sectors for money laundering and terrorist financing purposes.
Another way to improve compliance is by enhancing the capacity of the Financial Monitoring Service and other relevant authorities. This could include providing additional training to staff, increasing the number of investigators and analysts, and improving the use of technology to detect and investigate suspicious transactions.
What are the Steps Azerbaijan Can Take to Comply with AML Regulations?
To comply with AML regulations, designated service providers in Azerbaijan must develop and implement a compliance program with a rigorous anti-money laundering counter-terrorism financing policy in place.
- Strengthening its AML/CFT legal framework
- Enhancing the capacity of its law enforcement agencies to investigate and prosecute money laundering and terrorist financing
- Enhancing international cooperation and exchange of information with other countries
- Conducting risk assessments regularly to identify and mitigate potential money laundering and terrorist financing risks
- Raising awareness and providing training to relevant stakeholders about AML/CFT measures and their obligations under the law.
Making these arrangements will strengthen Azerbaijan in the fight against money laundering. In this way, while preventing crime, NFTs will be used in accordance with their purpose, namely in the field of art.