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Armenia Country Summary

66.79 Country Rating /100
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Sanctions

Limited - OSCE - Weapons

FATF AML Deficient List

No

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

Armenia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Armenia was undertaken in 2019. According to that Evaluation, Armenia was deemed Compliant for 19 and Largely Compliant for 18 of the FATF 40 Recommendations.

US Department of State Money Laundering assessment (INCSR)

Armenia was deemed a Jurisdiction of Primary Concern by the US Department of State 2018 International Narcotics Control Strategy Report (INCSR). The Overview from the report is as follows: -

Armenia is gradually strengthening its AML legislation to match international standards and has achieved eight money laundering convictions since the April-May 2018 “Velvet Revolution.”  This number represents a marked increase over pre-revolutionary convictions.

Proposed changes to Armenia’s strict bank secrecy laws and draft legislation to establish a civil asset forfeiture regime should provide the Armenian criminal justice system with new authorities and tools to strengthen money laundering investigations and ramp up convictions further in 2020 and beyond.

Overview

Armenia strengthened its anti-money laundering/combating the financing of terrorism (AML/CFT) legislation during 2021, while law enforcement authorities continued pursuing criminal cases against high-level officials from prior governments and associated oligarchs.  In 2021, Armenia introduced provisions that will subject legal entities to criminal penalties for money laundering, widen the definition of politically exposed persons (PEPs), and establish a centralized bank account register.  

Based on 2020 legislation, prosecutors can now initiate cases of non-conviction-based forfeiture of unjustified assets, which are subject to examination by specialized civil judges.  Recent amendments to the Judicial Code authorize establishment of a specialized anticorruption court.

Bank secrecy laws remain largely unchanged from 2020 and continue to hinder investigators from gaining access to banking records.  

According to preliminary findings in Armenia’s 2017-2020 national risk assessment (NRA), the risk of money laundering has been assessed as medium and that of terrorist financing (TF) as low. 

Sanctions

In February 1992, the Organisation for Security and Co-operation in Europe (OSCE) requested that all OSCE participating states should introduce an embargo on 'all deliveries of weapons and munitions to forces engaged in combat in the Nagorno-Karabakh area'. This embargo is still in force.

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)
Transparency International Corruption Index                          47
World Governance Indicator – Control of Corruption             56

Businesses operating or planning to invest in Armenia face high corruption risks. Progress has been made to fight pervasive corruption; however, the close relationship between oligarchs, and political and business circles raise concerns about cronyism and influence. The Criminal Code criminalizes several forms of corruption including active and passive bribery, extortion, and abuse of office. Gifts and Facilitation payments are also considered illegal in Armenia, nonetheless, these practices are widespread. For further information - GAN Integrity Business Anti-Corruption Portal

Economy

Over the past several years, Armenia has received consistently respectable rankings in international indices that review country business environments and investment climates. Projects representing significant U.S. investment are present in Armenia’s energy and mining sectors. U.S. investors in the banking, pharmaceutical, and information technology sectors, among others, have also acquired assets in Armenia. Armenia presents a variety of opportunities for investors, and the country’s legal framework and government policy aim to attract investment, but the investment climate is not without challenges. Obstacles include Armenia’s small market size, relative geographic isolation due to closed borders with Turkey and Azerbaijan, weaknesses in the rule of law and judiciary, and a legacy of corruption. Net foreign direct investment inflows are relatively low. Following Russia’s further invasion of Ukraine in 2022, tens of thousands of Russians, Belarusians, and Ukrainians relocated to Armenia. In addition, hundreds of businesses relocated to, or were registered in, Armenia. The consumption spending and capital inflows related to these relocations fueled Armenia’s 2022 GDP growth of nearly 13 percent. A projected slowdown of new arrivals to Armenia is expected to result in a 2023 GDP growth of just over five percent.

In May 2015, Armenia signed a Trade and Investment Framework Agreement with the United States. This agreement established a United States-Armenia Council on Trade and Investment to discuss bilateral trade and investment and related issues. Since 2015, Armenia has been a member of the Eurasian Economic Union, a customs union that brings Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia into a single integrated market. In November 2017, Armenia signed a Comprehensive and Enhanced Partnership Agreement with the European Union, which aimed in part to improve Armenia’s investment climate and business environment.

Armenia imposes few restrictions on foreign control and rights to private ownership and establishment. There are no restrictions on the rights of foreign nationals to acquire, establish, or dispose of business interests in Armenia. Business registration procedures are generally straightforward. According to foreign companies, otherwise sound regulations, policies, and laws are sometimes undermined by problems such as the lack of independence, capacity, or professionalism in key institutions, most critically the judiciary. Armenia does not limit the conversion and transfer of money or the repatriation of capital and earnings. The banking system in Armenia is sound and well-regulated, but investors note that the financial sector is not highly developed. The U.S.-Armenia Bilateral Investment Treaty provides U.S. investors with a variety of protections. Although Armenian legislation offers protection for intellectual property rights, enforcement efforts and recourse through the courts are in need of improvement.

Following the 2020 hostilities over Nagorno-Karabakh (NK), the incumbent government retained power in June 2021 snap parliamentary elections that met international democracy standards. The government continues to push forward with economic and anti-corruption reforms that have improved the business climate. Overall, the competitive environment in Armenia is improving, but several businesses have reported that broader reforms across judicial, tax, customs, health, education, military, and law enforcement institutions will be necessary to shore up these gains.

Despite improvements in some areas that raise Armenia’s attractiveness as an investment destination, investors claim that numerous issues remain and must be addressed to ensure a transparent, fair, and predictable business climate. A number of private sector representatives have raised concerns about the quality of dialogue between the private sector and government. Investors have also flagged issues regarding government officials’ ability to resolve problems they face in an expeditious manner. An investment dispute in the country’s mining sector has attracted significant international attention and remains outstanding after several years.

Country Links

Central Bank of Armenia

Financial Monitoring Center (FMC )

Search - Electronic Register, Government of Armenia

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