MONEYVAL Review Highlights Progress and Ongoing Weaknesses in Armenia’s Anti-Money Laundering Framework

A detailed evaluation by MONEYVAL has identified meaningful administrative improvements in Armenia’s anti-money laundering and counter-financing of terrorism regime while also pointing to persistent structural shortcomings that continue to undermine the effectiveness of financial crime investigations. According to the assessment, national authorities possess a reasonable understanding of the country's principal financial crime risks, yet operational weaknesses continue to limit the successful investigation and prosecution of sophisticated money laundering cases. The report concludes that law enforcement agencies must place greater emphasis on tracing criminal assets and pursuing complex financial investigations instead of concentrating predominantly on self-laundering cases. The evaluation represents an important milestone for Armenian regulators as they remain subject to enhanced international scrutiny and work to bring their legal and institutional framework into closer alignment with global standards.

The report recognizes significant progress achieved by Armenia’s Financial Monitoring Center, particularly in strengthening both its staffing levels and technical capabilities while expanding its ability to collect and analyze financial information. As the country's financial intelligence unit, the center plays a central role in supplying law enforcement agencies with intelligence designed to support investigations into money laundering and other financial crimes. Its expanded technological infrastructure now enables more comprehensive monitoring of financial transactions and improves the identification of hidden assets and suspicious financial activity. Despite these improvements, the evaluation stresses that authorities are not yet making full use of the intelligence generated by the Financial Monitoring Center during criminal investigations. Investigators frequently focus on the underlying criminal offenses while failing to pursue the financial dimensions of those crimes, resulting in missed opportunities to identify and recover illicit assets. The report also notes that suspicious transaction reports submitted by private-sector reporting entities remain insufficient in both quantity and analytical quality, creating weaknesses within the country's broader anti-money laundering system.

To address these deficiencies, the evaluation recommends that financial investigations become an integral component of criminal inquiries from their earliest stages. Authorities are encouraged to embed financial intelligence into routine policing practices so that investigators move beyond simply identifying domestic predicate offenses and instead focus on dismantling the broader criminal organizations responsible for generating illicit proceeds. The report further concludes that Armenia's ability to identify and respond to international financial crime risks remains limited because investigative efforts continue to emphasize domestic criminal activity rather than cross-border financial flows. Strengthening these capabilities will require additional specialized training for regulatory personnel so they can make better use of advanced analytical tools, databases, and financial intelligence software. By transforming raw financial information into reliable evidence suitable for criminal proceedings, authorities can significantly improve prosecutorial outcomes. Achieving this objective will also require closer cooperation between administrative agencies and judicial investigators to ensure that valuable financial intelligence is consistently incorporated into criminal prosecutions rather than overlooked.

The evaluation finds that Armenia's national risk assessment and broader anti-money laundering strategies generally provide an appropriate response to the country's known domestic threats. Authorities have identified fraud, embezzlement, corruption, tax offenses, narcotics trafficking, and cybercrime as the primary domestic sources of illicit proceeds. While officials demonstrate a solid understanding of these internal risks, the report concludes that their assessment of international threats requires considerable improvement. Greater attention must be devoted to understanding how transnational criminal organizations exploit domestic economic sectors to launder criminal proceeds originating abroad. In addition, the assessment highlights emerging risks associated with virtual assets and digital currencies, noting that current regulatory frameworks have not yet fully addressed the vulnerabilities presented by these rapidly evolving technologies. The real estate sector is identified as another area requiring urgent attention because property transactions remain an attractive method for concealing beneficial ownership and integrating illicit funds into the legitimate economy.

MONEYVAL also emphasizes the need to strengthen cooperation among domestic government agencies responsible for combating financial crime. More effective information sharing and faster operational coordination would improve the country's ability to respond to emerging threats. Although Armenia possesses an adequate legal framework for international cooperation, the report observes that its practical application varies depending on the nature of the underlying offense. Authorities have demonstrated strong international cooperation in corruption and bribery investigations but have shown considerably less initiative when dealing with offenses such as narcotics trafficking and cross-border fraud. The evaluation recommends significant improvements in both the quantity and quality of suspicious transaction reports submitted by private-sector entities. While regulators have established effective entry controls that help prevent criminals from acquiring ownership or control of regulated financial institutions, supervision of designated non-financial businesses and professions remains inadequate. Lawyers, real estate professionals, and other designated non-financial businesses currently face relatively minor sanctions for compliance failures, reducing the effectiveness of the overall regulatory regime.

The report acknowledges that recent legislative and institutional reforms have contributed to an increase in money laundering investigations but concludes that important structural weaknesses remain within the criminal justice system. Prosecutors continue to rely heavily on predicate offenses when pursuing money laundering cases, focusing primarily on self-laundering linked directly to crimes committed within Armenia. This approach limits the country's ability to prosecute more sophisticated stand-alone money laundering schemes, particularly those involving offenses committed abroad or cases where the underlying criminal conduct cannot easily be established. The evaluation also finds that Armenia lacks a coherent national strategy governing the identification, seizure, confiscation, and management of criminal assets. Although specialized institutions and legal mechanisms have been introduced, the overall volume of confiscated property remains disproportionately low when compared with estimates of the country's shadow economy.

The introduction of a civil non-conviction-based forfeiture regime has strengthened the government's ability to recover unexplained wealth, but the report concludes that this mechanism has not yet reached its full potential. MONEYVAL recommends a comprehensive assessment of the country's entire asset recovery process to identify procedural bottlenecks that occur between the initial identification of criminal assets and their eventual confiscation and disposal. The report further recommends expanding the resources available to specialized investigators and enhancing their expertise in forensic accounting techniques needed to identify hidden ownership structures and sophisticated financial arrangements. It also calls for the urgent completion of Armenia's beneficial ownership register to improve corporate transparency across all sectors of the economy. Existing systems do not adequately verify either the accuracy or timeliness of ownership information submitted by legal entities, allowing shell companies to remain effective tools for concealing illicit wealth. Regulators are urged to strengthen verification procedures within corporate registries to prevent the misuse of corporate structures for financial crime.

The evaluation also recognizes Armenia's well-developed framework for implementing targeted financial sanctions related to international security threats. These mechanisms facilitate effective coordination among government agencies while supporting risk-based supervision of non-profit organizations to reduce the risk of abuse by illicit actors. Despite these positive developments, MONEYVAL concludes that the country's broader anti-money laundering framework still requires significant improvements before it can fully satisfy international standards. As a result, Armenia has been placed under the organization's enhanced follow-up process, requiring regular reporting on both legislative reforms and operational progress.

To guide future reforms, MONEYVAL has issued a detailed roadmap outlining a series of recommendations that authorities are expected to implement over the next three years. The roadmap calls for comprehensive structural reforms, including major improvements to the methods used to identify, recover, manage, and permanently confiscate criminal assets. Authorities are expected to demonstrate that asset recovery has become a central enforcement objective rather than a secondary consideration following traditional criminal prosecutions. The report also recommends significantly stronger enforcement measures against non-compliant businesses operating outside the financial sector in order to reinforce safeguards protecting the broader financial system. International cooperation should likewise be expanded beyond corruption investigations to encompass every category of transnational financial crime. Achieving these objectives will require sustained political commitment, increased financial investment, administrative reform, and legislative amendments designed to eliminate existing legal weaknesses. MONEYVAL concludes that Armenia's progress during the next 36 months will determine whether it can successfully exit the enhanced follow-up process and restore international confidence in the strength of its financial crime prevention framework. Failure to implement the recommended reforms could adversely affect the reputation of the country's banking sector and complicate future foreign investment opportunities.

By fLEXI tEAM