AML in Azerbaijan

Addressing money laundering is a significant concern both locally and internationally. Azerbaijan, like many other countries, faces challenges related to money laundering activities and is taking several measures to combat this issue. Azerbaijan’s economy, situated at the crossroads of Europe and Central Asia and abundant in natural resources, is experiencing rapid growth. Unfortunately, this growth has been accompanied by an increase in crimes such as illegal drug trade, theft, robbery, tax evasion, and human trafficking. The country also struggles with endemic corruption and the presence of organized crime groups. Azerbaijani authorities believe that money laundering and terrorist financing largely occur through the banking sector.

It is important to note that Azerbaijan is not listed among the countries identified by the Financial Action Task Force (FATF) as having significant anti-money laundering deficiencies. Azerbaijan is deemed Partially Compliant with FATF’s 40 + 9 Recommendations and has not been previously blacklisted by FATF. The country does not face any international sanctions. Furthermore, Azerbaijan recently received an evaluation from the Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL) on December 12th. MONEYVAL serves as the monitoring body for the Council of Europe and is responsible for reporting to the Committee of Ministers of the Council of Europe.

Azerbaijan has also entered into agreements with other countries to combat money laundering, including cooperation agreements with Georgia and Turkey to combat organized crime and other serious offenses. Additionally, there is a Memorandum of Understanding between the Financial Markets Supervisory Authority of the Republic of Azerbaijan and the Financial Monitoring Department under the Ministry of Economic Affairs and Finance of the Islamic Republic of Iran, which focuses on cooperation in preventing the laundering of illicitly obtained funds and other assets.

Similar to other countries, Azerbaijan has various institutions responsible for regulating money laundering laws. These institutions include the Anti-Corruption Commission, the Ministry of Communication and Information Technologies, the Ministry of Justice, the Central Bank, the Ministry of Tax, the Department of Anti-Corruption in the Chief Prosecutor’s Office, the State Customs Committee, the Ministry of Foreign Affairs, the Chamber of Auditors, the Ministry of National Security, and the Union of Bar Associations.

The Anti-Corruption Commission carries out several functions, including participation in the development of state policies related to anti-corruption efforts, coordination of activities among state organs and other relevant bodies in this domain, analysis of the effectiveness and state of the fight against corruption, and overseeing the implementation of Anti-Corruption and State Anti-Corruption Programs.

Azerbaijan has encountered certain challenges in adhering to Anti-Money Laundering (AML) regulations. Examples include the inadequate criminal enforcement of money laundering, insufficient oversight of post offices, and the absence of an internal control system for small businesses. To address these difficulties, Azerbaijan has implemented multiple measures, rules, and procedures, with the aim of mitigating such issues. The Presidential decree on “Legalization of Funds and Other Properties Accused in 2017 and the Action Plan to Combat Financing Terrorism” underscores the government’s commitment to this strategy. To enhance and strengthen the money laundering system, certain changes have been proposed:

  1. Enhancing international collaboration by signing intergovernmental memoranda of understanding with financial supervisory authorities or financial monitoring agencies of other countries. This would enable the reporting of illicit activities related to money laundering.
  2. Expanding the scope of anti-money laundering regulations in the travel agency and car dealership sectors to include tracking of high-value consumer goods like arts and antiques.
  3. Considering the inclusion of micro and small businesses in the framework of preventing money laundering as per the “Approval of Criteria for the Distribution of Micro, Small, Medium, and Large Entrepreneurship Issues” decision by the Cabinet of Ministers of the Republic of Azerbaijan.