Azerbaijan’s AML/CFT supervisors
Azerbaijan is not on the list of countries listed by the Financial Action Task Force (FATF) as having strategic anti-money laundering (AML) deficiencies. FATF Recommendations are partially followed by Azerbaijan, and it is not subject to any foreign sanctions.
The Central Bank of the Republic of Azerbaijan
The Central Bank of the Republic of Azerbaijan was established on Feb 1992, The Central Bank is the regulatory body in charge of ensuring that credit institution and leasing companies comply with AML/CFT legislation. In addition, the central bank takes the required administrative and control measures to ensure that credit organisation and their employees with AML/CFT legislation requirements.
Financial Markets Supervision Authority (FMSA)
Financial Markets Supervision Authority (FMSA) established on Feb 2016, with the aim of enhancing oversight of AML/CFT prevention system, and enhancing licensing and supervision of the securities market, investment funds, insurance.
Financial Monitoring Services (FMS-AZ)
Financial Monitoring Services (FMS-AZ), Azerbaijan’s FIU, was established on May 2018. FMS is in charge of centralised supervision and control, as well as coordinating activities in the Republic of Azerbaijan to deter money laundering and terrorism financing.
How to comply with AML/CFT regulations in Azerbaijan
Designated services are required to develop and implement a compliance program
As a designated service provider, you must ensure that you have a rigorous anti-money laundering/counter-terrorism financing policy in place, which includes the following:
- Take measures to identify and verify customers and beneficial owners before establishing a business relationship
- Conduct ongoing due diligence of business relationships including scrutiny of transactions and ensuring that data collected as part of the CDD process is continuously updated
- Obtain senior management approval for onboarding politically exposed persons of a foreign country
- Have strong internal control mechanisms that are effective in preventing the legalisation of illegally acquired funds and the funding of terrorism
- Establish an internal audit process to ensure that you comply with the system.
A "one-size-fits-all" solution may not be suitable in the financial sector. Each registered entity should consider the unique nature of its market, corporate structure, clients and transaction types, and other factors when adopting initiatives and procedures to ensure their effectiveness.
Azerbaijan has established a risk-based approach towards customer due diligence which is improved and streamlined for various types of customers, business relationships, transactions. The AML/CFT program should have a defined connection between risk categorisation, processes, policies and controls that address those risks.
What are my AML/CFT reporting obligations?
As a designated service provider, the company is required to notify FIU-Azerbaijan regarding any suspicious activities and maintain appropriate records:
- Recordkeeping - collected information must be held for at least 5 years, or more upon request from the relevant supervisory authority.
- Suspicious Transaction Report (STR) - for transactions that raise suspicions, or reasonable grounds for suspicion, that funds are proceeds of a crime or related to the financing of terrorism, an STR must be submitted within three business days after receiving the order to execute the transaction.
- Threshold reporting - entities must identify and verify customers and beneficial owners before carrying out occasional transactions above the designated threshold of 15000 manats.