Azerbaijan should step up investigations and prosecutions of money laundering and improve supervisory arrangements, says MONEYVAL

  • 12.02.2024
  • 0
  • 102 Views

Strasbourg, 12.02.2024 – In the new report published today, Council of Europe’s anti-money laundering body MONEYVAL calls on Azerbaijan authorities to further strengthen measures to combat money laundering (ML), the financing of terrorism (TF) and financing of proliferation, in particular in the areas of preventive measures and supervision.

The report provides a comprehensive assessment of the country’s level of compliance with standards set by the Financial Action Task Force (FATF). Since 2014, when MONEYVAL last evaluated Azerbaijan, the country has taken several actions to strengthen its legal and institutional framework to tackle money laundering, the financing of terrorism (AML/CFT) and has started to put in place the elements of an effective AML/CTF system.

MONEYVAL notes that Azerbaijan has achieved a substantial level of effectiveness for countering terrorist financing and that the authorities have demonstrated their ability to successfully investigate TF offences (seven convictions were secured during the reference period). Similarly, in international cooperation, Azerbaijan achieved a substantial level of effectiveness and was commended for the authorities’ capacities to provide and seek constructive assistance. MONEYVAL’s evaluation report on Azerbaijan notes that the country demonstrates a fair understanding of ML/TF risks, according to which domestic corruption, tax related crimes, smuggling and drug trafficking are the main ML predicate offences.

The report found that major improvements are needed to pursue the investigation and prosecution of money laundering effectively. The law enforcement authorities have access to financial intelligence and other information which they use to a certain extent to establish evidence and trace the proceeds of crime linked to money laundering, financing of terrorism and predicate offences. However, the relevant authorities would benefit from increased domestic cooperation at an operational level.

Additional measures are required to ensure more consistency in investigations and prosecutions. Some money laundering cases related to crimes posing high threat have been investigated and prosecuted, but the results are not fully consistent with the risk profile of the country. Most of the prosecutions and convictions achieved pertain to self-laundering, and legal persons have not been investigated so far for money laundering.

Azerbaijan pursues confiscation as a policy objective. While some commendable amounts of criminal proceeds were confiscated, the country must do more to trace assets by conducting systematically parallel financial investigations in all proceeds generating crimes, including TF. 

MONEYVAL finds that Azerbaijan has a sound legal framework in place for implementing targeted financial sanctions without delay both for TF and proliferation financing. Concerns were identified about the implementation of those measures by the private sector, as well as the adequacy of the supervision of compliance, as the supervisors have never considered proliferation financing issues as part of their work.

Azerbaijan had conducted, shortly before the MONEYVAL visit, an assessment of the risk of Non-Profit Organisations (NPO) sector being abused for TF purposes. MONEYVAL calls on the authorities to swiftly apply preventive, targeted, and proportionate risk mitigation measures, all while being careful to ensure that legitimate NPO activities are not being disrupted or discouraged.

As regards supervision of financial institutions and designated non-financial businesses and professions, MONEYVAL calls for fundamental improvements. While there are some controls over persons who can significantly influence the decision-making process of financial institutions, these do not cover beneficial owners and potential association with criminals. The understanding of risks varies amongst supervisors, and the risk-based approach in supervision need to be strengthened. Enforcement and sanctioning powers for breaches of professional AML/CFT obligations should also be strengthened.

MONEYVAL acknowledges that Azerbaijan has taken important steps to prevent the misuse of legal persons, however more proactive measures are required ensure the transparency of legal persons. Reporting entities should apply the necessary identification and verification measures in case of politically exposed persons and beneficial owners.

In line with the follow-up procedures, Azerbaijan will report back to MONEYVAL on progress achieved in improving the implementation of its AML/CFT measures in December 2025.

* * *

The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) is a monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering, the financing of terrorism and the financing of proliferation of weapons of mass destruction, as well as the effectiveness of their implementation. MONEYVAL evaluates 33 States and territories and makes recommendations to national authorities in respect of necessary improvements to their anti-money laundering and counter terrorist financing systems and to counter proliferation financing.

OUR PARTNERS

ORER ARMENIAN EUROPEAN MAGAZINE
connect with us: