US embassy cable - 04YEREVAN2604

UNCLAS YEREVAN 002604 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR INL/JCAMPBELL;INL/CMESHESKE; 
JUSTICE FOR OIA AND AFMLS, TREASURY FOR FINCEN, OTA 
 
E.O. 12958: N/A 
TAGS: EFIN, KCRM, KSEP, PTER, SNAR, AM 
SUBJECT: NEW ANTI-MONEY LAUNDERING LAW MOVING FORWARD 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY. 
 
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SUMMARY 
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1.  (SBU) On November 24, 2004 the Armenian parliament 
adopted the first reading of the Law Against Money 
Laundering and Terrorist Finance, which is intended to 
implement recommendations that MoneyVal (the Council of 
Europe's committee on anti-money laundering) made during its 
review of Armenia earlier this year.  The law will 
significantly improve Armenia's regime for the control of 
money laundering by establishing a single Financial 
Intelligence Unit (FIU), consolidating reporting 
requirements for large money transfers and all suspicious 
transactions, and bringing banks, non-banking financial 
institutions and casinos under the same legal framework.  In 
addition, the law specifically criminalizes the financing of 
terrorism.  While the law may face some minor changes during 
its second and third readings, the parliament has committed 
to it in principle by adopting the first reading.  The 
Central Bank has told us that it expects parliament to pass 
the law substantially unchanged before the New Year.  End 
summary. 
 
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FINANCIAL INTELLIGENCE UNIT TO BE CREATED IN CENTRAL BANK 
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2.  (SBU) Following the passage of the first reading of the 
new anti-money laundering law, the Central Bank has the 
mandate to proceed with the establishment of a Financial 
Intelligence Unit (FIU).  Nerses Yeritsyan, Advisor to the 
Central Bank Chairman, is charged to form the FIU and create 
banking procedures and by-laws to implement the FIU's 
reporting regime.  Yeritsyan told us that he would be the 
head of the FIU, "at least in the beginning."  The FIU will 
be an independent body that reports to the chairman of the 
Central Bank.  Its mandate will be limited to gathering 
intelligence and analyzing it.  The FIU will transfer cases 
to the Procurator General for enforcement.  Yeritsyan said 
that he expects the FIU to be fully operational by mid-2005. 
The draft 
 
3.  According to Yeritsyan, the new anti-money laundering 
law and the creation of a new FIU are steps towards meeting 
MoneyVal's recommendations by the February 2005 deadline. 
When asked about joining the Egmont group, Yeritsyan said 
that he intends to work toward it but that the FIU as 
envisaged by the new legislation lacks legal competency to 
deal directly with FIU's of other countries. 
 
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DRAFT LAW CRIMINALIZES TERRORIST FINANCE 
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4.  The new draft anti-money laundering law also contains 
provisions to strengthen Armenia's legislation to combat 
terrorist finance by specifically criminalizing acts that 
assist the financing of terrorism.  We will report this 
septel, once the law has passed its final reading. 
 
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COMMENT 
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4.  (SBU) While the new money-laundering law is a step 
forward, there are still some gaps.  Only some institutions 
covered by the new law will report directly to the FIU. 
Casinos and insurance companies will still report to their 
regulators in the Ministry of Finance, who will then forward 
suspicious cases to the FIU.  It is not clear what 
competence the FIU will have to investigate on its own 
initiative institutions that do not report directly to it. 
Additionally, the new law lacks clear procedures for 
freezing or confiscating assets, although Yeritsyan tells us 
that by-laws will put measures in place.  Yeritsyan told us 
that he intends to approach international donors for 
assistance in three areas, technical assistance in the 
creation of procedures, by-laws and reporting systems, the 
set-up and maintenance of databases, and training for the 
officials at banks and exchange offices who are required to 
report suspicious transactions. 
EVANS