Armenia -- Sanctions Compliance Regulatory Overview

Armenia, as a member of the global financial system and a country committed to international anti-money laundering and combating the financing of terrorism (AML/CFT) standards, implements various sanctions and restrictions that apply to cryptocurrency activities, particularly for Virtual Asset Service Providers (VASPs). While Armenia does not impose its own specific crypto-centric sanctions lists beyond its general AML/CFT framework, its VASPs are indirectly and directly impacted by international sanctions regimes.

The Central Bank of Armenia (CBA) is the primary regulatory body responsible for overseeing financial institutions, including VASPs, in their compliance with AML/CFT requirements.

Here's a breakdown of the applicable sanctions and restrictions:

1. Key Regulatory Framework and Compliance Requirements for VASPs

Armenia's approach to cryptocurrency sanctions is embedded within its broader AML/CFT legal framework, which is aligned with the recommendations of the Financial Action Task Force (FATF). Armenia is a member of MONEYVAL, an FATF-Style Regional Body, and thus adheres to FATF standards.

Legal Basis:

• Law of the Republic of Armenia on Combating Money Laundering and Terrorist Financing (ՀՀ օրենքը «Փողերի լվացման և ահաբեկչության ֆինանսավորման դեմ պայքարի մասին»): This is the primary legislation. It mandates financial institutions, including VASPs, to implement robust AML/CFT measures, which inherently include sanctions screening.

  • While a direct English government link is hard to find for the latest version, the Armenian text is authoritative.
  • General Information on Armenian Legislation: Legal Acts of the Republic of Armenia (Arlis) (Users can search for the specific law here).

• Central Bank of Armenia (CBA) Regulations: The CBA issues sub-legal acts, regulations, and guidelines that detail the specific obligations for financial institutions regarding AML/CFT, including for VASPs.

  • CBA Official Website: Central Bank of Armenia (Look for sections on Financial Supervision, Legal Acts, and AML/CFT). The CBA has been actively working on cryptocurrency regulation, including licensing requirements for VASPs.

FATF Recommendations:

• FATF Recommendation 15 (New Technologies) and its Interpretive Note: This mandates that countries regulate and supervise VASPs for AML/CFT purposes. Key requirements include:
  • Customer Due Diligence (CDD), including beneficial ownership.
  • Record-keeping.
  • Suspicious Transaction Reporting (STR).
  • Application of the "Travel Rule" for crypto transfers.
  • Sanctions screening is an inherent part of CDD and ongoing monitoring for FATF-compliant jurisdictions.
  • FATF Recommendations: FATF Website

2. OFAC/EU/UN Sanctions Compliance Requirements for VASPs

While Armenia does not directly enforce extraterritorial sanctions of individual countries like the US or EU against non-Armenian entities, Armenian VASPs must comply with them due to several factors:

• UN Sanctions: These are directly binding on all UN member states, including Armenia. The Armenian government must implement UN Security Council resolutions, particularly those related to terrorism financing and proliferation financing (e.g., designations under UNSCR 1267 for Al-Qaeda/ISIS and UNSCR 1988 for the Taliban, and various resolutions concerning Iran, North Korea, etc.).

  • Armenian VASPs are legally required to screen against and freeze assets of individuals and entities designated by the UN.
  • UN Security Council Consolidated List: UN Security Council

• OFAC (U.S. Department of the Treasury's Office of Foreign Assets Control) Sanctions:

  • Direct Impact: OFAC sanctions directly apply to U.S. persons, wherever located, and to transactions involving a U.S. nexus (e.g., USD transactions, U.S. technology). If an Armenian VASP engages in transactions involving U.S. persons or the U.S. financial system, it is directly exposed to OFAC sanctions.
  • Secondary Sanctions Risk: OFAC also imposes secondary sanctions on non-U.S. persons who engage in certain activities with sanctioned entities or countries (e.g., Iran, Russia, North Korea, Syria). An Armenian VASP that facilitates transactions for a sanctioned entity (even if neither the VASP nor the counterparty is U.S. person) risks losing access to the U.S. financial system, having its assets frozen in the U.S., or being added to OFAC's Specially Designated Nationals (SDN) list.
  • Compliance Requirement: To avoid severe reputational, financial, and legal repercussions, Armenian VASPs dealing with international clients or currencies must screen against OFAC lists, especially the SDN list.
  • OFAC Sanctions List (SDN List): OFAC SDN List

• EU Sanctions:

  • Direct Impact: EU sanctions directly apply to EU persons (citizens, residents, entities) and to activities within EU jurisdiction. If an Armenian VASP has an EU nexus (e.g., EU customers, EU-based operations, EU banking relationships), it must comply with EU sanctions.
  • Indirect Impact/Risk: Similar to OFAC, non-compliance with EU sanctions when dealing with EU partners can lead to de-risking by EU financial institutions and loss of access to EU markets.
  • Compliance Requirement: Armenian VASPs with any EU exposure should screen against relevant EU sanctions lists.
  • EU Sanctions Map: EU Sanctions Map

3. Sanctioned Entity Screening Obligations

Armenian VASPs are required to:

• Implement a Risk-Based Approach: Identify, assess, and understand their money laundering and terrorist financing risks, which includes sanctions risk.
• Conduct Sanctions Screening: Screen all customers (new and existing) and, on an ongoing basis, all transactions against relevant sanctions lists. This includes:
  • The UN Security Council Consolidated List.
  • OFAC's SDN List and other relevant OFAC lists.
  • EU sanctions lists.
  • Any domestic lists published by the Armenian authorities (see below).
• Identify and Verify Beneficial Ownership: Ensure that the true owners of customer accounts are identified and screened.
• Monitor Transactions: Implement systems to monitor transactions for suspicious activities and patterns that might indicate sanctions evasion or sanctioned entities' involvement.
• Freeze Assets: Immediately freeze assets of designated individuals/entities upon identification and report to the Financial Monitoring Center (FMC) of the CBA.
• Prohibit Transactions: Refuse to process transactions for or with sanctioned individuals/entities.

4. Geographic Restrictions

• Sanctioned Jurisdictions: While Armenia doesn't impose explicit geographic restrictions on crypto independent of sanctions, VASPs must block transactions originating from or destined for jurisdictions comprehensively sanctioned by the UN, OFAC, or EU (e.g., North Korea, Iran, specific regions like Crimea).
• High-Risk Jurisdictions: VASPs must apply enhanced due diligence (EDD) to transactions involving high-risk jurisdictions as identified by the FATF or the Armenian authorities.
• Internal Policies: VASPs may also establish their own internal geographic restrictions based on their risk appetite and licensing conditions, refusing service to certain countries.

5. Penalties for Violations

Violations of Armenia's AML/CFT laws, which encompass sanctions compliance, can lead to severe penalties:

• Administrative Penalties:
  • Fines imposed by the Central Bank of Armenia (CBA) on financial institutions and their management.
  • Suspension or revocation of licenses for VASPs.
  • Orders to cease and desist operations.
• Criminal Penalties:
  • For serious violations, particularly involving money laundering or terrorist financing, individuals (including VASP management and employees) can face imprisonment.
  • Article 190 (Money Laundering) and Article 217 (Financing of Terrorism) of the Criminal Code of the Republic of Armenia define these offenses and their associated penalties.
  • Criminal Code of the Republic of Armenia (Արդարադատության նախարարություն): Arlis Legal Acts (Search for the Criminal Code).

6. Country-Specific Sanctions Lists for Crypto (Armenia)

Armenia maintains a list of individuals and entities designated for terrorism financing and proliferation financing in accordance with UN Security Council resolutions and its domestic AML/CFT framework. This list is managed by the Financial Monitoring Center (FMC), which operates under the Central Bank of Armenia.

• Domestic Designated Persons List: The FMC is responsible for identifying, freezing, and reporting on assets related to terrorism financing and proliferation. This includes maintaining a list of designated persons and entities, which financial institutions, including VASPs, must screen against.
  • While a direct, publicly available English link to the real-time FMC designated persons list is not readily available, financial institutions would access this information via official channels and updates from the CBA/FMC.
  • Financial Monitoring Center (FMC) within the CBA: CBA Official Website - AML/CFT Section

In summary: Armenian VASPs operate under a clear mandate to comply with robust AML/CFT regulations. This includes a stringent obligation to screen against internationally recognized sanctions lists (UN, OFAC, EU) and domestic designated persons lists, enforce geographic restrictions based on sanctioned jurisdictions, and report suspicious activities to the authorities, under threat of significant penalties. The FATF recommendations serve as the global blueprint, which Armenia has integrated into its national legislation and regulatory practices.