Azerbaijan's measures countering terrorist financing, money laundering
Review of MONEYVAL’s evaluation report

ANALYTICS  19 February 2024 - 16:33

Azerbaijan has achieved a high level of efficiency in combating terrorism financing, successfully investigating offences over the last five years, according to the latest evaluation report by the Council of Europe’s anti-money laundering body MONEYVAL.

The report, adopted by MONEYVAL on February 12, 2024, on the fifth-round evaluation of the anti-money laundering and counter-terrorism financing (AML/CFT) system of Azerbaijan, provided a comprehensive assessment of the country’s level of compliance with standards set by the intergovernmental organisation Financial Action Task Force (FATF), which can be deemed satisfactory for the oil-reach Caspian nation.

The report credits Azerbaijan for securing seven convictions related to terror financing offences during the assessed period, showcasing the nation's proactive stance and capability in addressing such threats.

It finds that out of the 11 effectiveness level indicators, 2 are rated as “substantial”, and 8 are rated as "moderate". Azerbaijan demonstrated 91 per cent compliance with only one indicator rated as "low".

As a result of the evaluation, Azerbaijan will not be included in the “grey list” of FATF, where enhanced monitoring measures are applied, while 9 out of the 29 countries evaluated by MONEYVAL were included in the "grey list". The banking operations of the countries included in the "grey list" are subject to enhanced customer due diligence, which leads to the delay or cancellation of operations, and the suspension of correspondent relations between banks.

Based on an analysis of similar evaluations conducted in 161 countries, Azerbaijan’s results were higher than the average indicator, in terms of technical compliance with the national legislation with 40 recommendations of FATF.

In keeping with the report, the Azerbaijani Financial Intelligence Unit (FIU) is fully compliant with international standards. The capabilities of state bodies and the Azerbaijani FIU, providing effective assistance to the foreign FIUs and exchanging information, were highly appreciated in the report.

It is indeed a positive sign of the Azerbaijani authorities understanding of the importance of this field, global and regional risks and challenges, and strong political will to deal with them by having a strong FIU in the first place.

The Financial Monitoring Service, an independent government agency, acts as the country’s Financial Intelligence Unit (FIU), and is responsible for monitoring financial transactions, investigating suspicious activities, and enforcing regulations related to AML/CFT. The agency also receives and analyzes suspicious transaction reports from financial institutions, law enforcement agencies, and other government agencies.

MONEYVAL’s report also hailed a fair understanding of money laundering/terrorism financing risks in the country, saying that “domestic corruption, tax-related crimes, smuggling, and drug trafficking are the main money laundering predicate offences”.

Meanwhile, the evaluation report mentioned some shortcomings along with the positive sides. It called for taking important steps to effectively continue the investigation and criminal prosecution related to money laundering, as well as increasing internal cooperation at the operational level, carrying out investigations on the fraud facts related to legal entities, and achieving prosecutions and convictions of stand-alone money laundering cases.

In addition, Azerbaijan should do more to trace assets by systematically conducting parallel financial investigations in all income-generating crimes, including terrorism financing, the report underlined.

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.

Since 2014, when MONEYVAL last evaluated Azerbaijan, the country has taken several actions to augment its legal and institutional framework to tackle money laundering, terrorism financing and has started to put in place the elements of an effective AML/CTF system.

In Azerbaijan, the detection and prevention of the legalization of property obtained through crime and the financing of terrorism are regulated by the Anti-Money Laundering Law.

Over recent years, the results of criminal proceedings, initiated by Azerbaijan's State Security Service against terrorism financing and related offences, have significantly increased, exceeding the average statistics of EU member states.

The Azerbaijani Interior Ministry and the State Border Service are also involved in investigating and prosecuting money laundering and terrorism financing cases and preventing the movement of illicit funds and activities through the country’s borders. In addition, the Central Bank of Azerbaijan takes the required administrative and control measures to ensure that credit organization and their employees with AML/CFT legislation requirements.

Despite geopolitical circumstances, stability and peace in Azerbaijan achieved through effective government policies in recent years to combat terrorism and financing it, make the country an appealing destination for international investment and tourism.

These achievements are the result of the reforms carried out in the country, the establishment of a transparent financial system, and the work done in the direction of reducing the level of criminality to a minimum.

Caliber.Az