Moneyval calls on Azerbaijan to intensify efforts on anti-money laundering

Council of Europe calls on Azerbaijan to step up actions to prevent and combat money laundering and terrorism financing.

In a report published on April 1, the Council of Europe’s anti-money laundering Committee (MONEYVAL) calls on Azerbaijan to intensify efforts to improve its anti-money laundering and counter-terrorist financing system, by addressing the identified  deficiencies and taking effective measures for the implementation of the Money Laundering (ML) offence.

The report sets out an analysis of the implementation of international and European standards on anti-money laundering/combating financing of terrorism (AML/CFT). The main findings can be summed-up as follows:

* The financing of terrorism (FT) offence is now broadly compliant with international standards and convictions in this area have been achieved. Significant deficiencies identified need addressing in the legislative framework regarding freezing of terrorist assets.

* While steps have been taken to strengthen the legislative provisions governing the confiscation of proceeds of crime and instrumentalities, property deriving from proceeds-generating offences has not been effectively confiscated.

* The Financial Intelligence Unit (FIU) is a strong actor within the AML/CFT system of Azerbaijan, albeit additional safeguards are needed to ensure that the FIU is free from any undue influence or interference.

* Law enforcement agencies are insufficiently trained to conduct financial investigations in ML/FT cases and their ability to identify, trace and seize proceeds of crime is restricted by limited access to financial information. Additionally, the customs authority is not required by law to stop or restrain currency in the event of suspicions of ML and FT and to report suspicions to the FIU.

* The legislative framework providing for AML/CFT preventive requirements is largely in place. Although financial institutions have a good understanding of their AML/CFT requirements, difficulties with respect to the identification of beneficial owners remain. Additionally, the level of reporting of ML and FT suspicions by financial institutions, except for banks, is low. In general, the non-financial sector was not found to apply AML/CFT requirements effectively.

* The AML/CFT supervisory framework for both the financial and non-financial sector requires further attention. There are still no measures to prevent criminals from holding an interest or management function in financial institutions. Sanctions available for infringements by financial institutions and the non-financial sector are not effective, proportionate or dissuasive.

* While domestic cooperation is robust, an overarching policy coordination mechanism at a domestic level is lacking. The legislative framework for the provision of mutual legal assistance is sound, although its effectiveness could not be demonstrated. The FIU and other law enforcement authorities have secure channels for the informal exchange of information with foreign counterparts. However, activity in this area is still limited and should be enhanced.

MONEYVAL will continue to monitor implementation of the recommendations by Azerbaijan through its regular follow-up procedures, which require the country to submit a follow up report by December 2016. Azerbaijan is also required to submit an expedited report on action taken to address certain significant shortcomings in December 2015.

*The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) is a Council of Europe body that assesses compliance with the relevant international and European standards to counter money laundering and terrorist financing, and makes recommendations to national authorities. 28 Council of Europe member states are currently subject to MONEYVAL’s evaluation procedures, as well as Israel, the Holy See (including the Vatican City State) and the United Kingdom’s Crown Dependencies of Guernsey, Isle of Man and Jersey. -02D-