NA ADOPTS NEW ANTI-MONEY LAUNDERING LAW

UNCLAS YEREVAN 002798



SIPDIS



SENSITIVE



DEPT FOR EUR/CACEN, INL (JCAMPBELL AND CMESHESKE)

JUSTICE FOR OIA AND AFMLS TREASURY FOR FINCEN, OTA



E.O. 12958: N/A

TAGS: EFIN, KCRM, KSEP, PTER, SNAR, AM

SUBJECT: NA ADOPTS NEW ANTI-MONEY LAUNDERING LAW



REF: YEREVAN 2604



1. (U) Sensitive But Unclassified. Please protect

accordingly.



--------------

SUMMARY

--------------



2. (U) The Armenian National Assembly (NA) adopted the Law

on Fighting Legalization of Illegally Received Income and

Terrorist Financing. The new law calls on the Central Bank

of Armenia to coordinate anti-money laundering and terrorist

financing activities in Armenia and defines the legal

grounds for fighting illegal financial transactions,

identifying and reporting on involved entities and creating

a Financial Intelligence Unit (FIU). The Central Bank is

responsible for developing the law's regulatory and

enforcement framework. The GOAM notes that adopting the law

places Armenia in compliance with international anti-money

laundering and terrorist financing initiatives including the

Money Val Committee of the Council of Europe and the

Financial Action Task Force (FATF). End Summary



--------------

NATIONAL ASSEMBLY ADOPTS THE LAW

--------------



3. (U) The Armenian National Assembly (NA) voted to adopt

the Law on Fighting Legalization of Illegally Received

Income and Terrorist Financing on December 14 and submitted

it to President Kocharian for signature on December 22. The

law will take effect roughly two months after the president

signs it. The Central Bank of Armenia (CBA) drafted the law

as part of an Anti-Money Laundering and Terrorism Financing

package to fulfill Armenia's obligation under the

International Convention on the Suppression of the Financing

of Terrorism, UN Security Council Resolution No. 1373

(2001). (Note: The National Assembly ratified the

convention early this year. End Note.) In addition to the

new law, the CBA's comprehensive package includes amendments

to 12 existing laws and the Criminal Code, affecting

banking, credit and non-profit organizations, insurance, and

gaming.



--------------

CBA SETS THE LEGAL FRAMEWORK

--------------



4. (U) The new law assigns the Central Bank of Armenia as

the single authorized body to coordinate anti-money

laundering and to battle terrorist financing activities in

the country. The CBA is working to develop a series of

implementing regulations (aiming to have them take effect by

June 2005) and plans to set up a Financial Intelligence Unit

(FIU) by March 2005. The implementing regulations include

the charter regulating CBA activities and define the mandate

of the CBA, FIU, other reporting entities and the

relationships among them.



--------------

LAW DEFINES A "DUBIOUS TRANSACTION"

--------------



5. (U) The new law lays out criteria that trigger a

reporting requirement under suspicion of money

laundering/terrorist financing. Financial institutions must

report any non real-estate transaction of more than 20

million dram (about USD 40,000),real-estate transactions of

more than 50 million dram (about USD 100,000) as well as any

money transfer of more than 5 million dram (about USD

10,000). The law also requires state registration

authorities to report any business purchase exceeding 30

million dram (USD 60,000) in a sole proprietorship company

and 40 million dram (about USD 80,000) for other types of

companies.



--------------

COMMENT

--------------



6. (SBU) This legislation brings Armenia into technical

compliance with its obligations under the International

Convention on the Suppression of the Financing of Terrorism,

UN Security Council Resolution No. 1373 (2001); the

effectiveness of the implementing regulations have yet to be

seen.

EVANS