Centralized exchange in Armenia

Lack of Specific Legislation: There is no dedicated law in Armenia regulating virtual assets or stipulating licensing requirements for crypto businesses. This creates a significant degree of legal uncertainty for operators.

Central Bank's Stance: The Central Bank of Armenia (CBA) has consistently maintained a cautious and conservative stance on cryptocurrencies. It has issued warnings to the public about the high risks associated with virtual assets, emphasizing that cryptocurrencies are not legal tender in Armenia and are not regulated or supervised by the CBA. They do not recognize cryptocurrencies as a form of electronic money, payment instrument, or security.

Crypto-to-Crypto: Generally unregulated. Operators function in a legal grey area.

Fiat-to-Crypto / Crypto-to-Fiat: If these activities are deemed by the CBA to fall under money transmission, currency exchange, or payment services, then a license for a payment organization or a foreign currency exchange office might be required. However, the CBA has not explicitly applied these existing licenses to cryptocurrency operations.

Securities Regulations: If a virtual asset is structured in a way that it qualifies as a security under Armenian law (e.g., representing ownership shares, debt, or a right to future profits), then it would fall under the regulation of the CBA, which supervises the securities market. This would require licenses for offering, trading, or managing securities.

Payment System Regulations: If a crypto-related service involves the processing of fiat currency (e.g., converting AMD to crypto or vice versa), it may inadvertently trigger requirements under the Law on Payment and Settlement Systems and Payment Organizations, potentially requiring a license for a payment organization or payment system operator from the CBA.

Direct Fines: Not a simple "penalty amount" like a regulatory fine. These are criminal cases. Penalties typically involve arrests, pre-trial detention, asset freezes/seizures (often multi-million dollar amounts in various currencies and cryptocurrencies), and eventual criminal conviction leading to significant prison sentences and restitution orders.

Regulator/Enforcement Body: Investigative Committee of Armenia, Prosecutor General's Office of Armenia, often in cooperation with law enforcement agencies from other countries (e.g., Russia, Georgia, US).

Examples of Seized Assets: Reports mention seizures of large sums in fiat currency, cryptocurrency, real estate, and luxury vehicles. For instance, some cases involved alleged damages amounting to tens or hundreds of millions of USD.

A criminal case under Articles 188 and 190 of the RA Criminal Code related to a crypto company was initiated, but the subsequent Armenian Court of Appeal ruling declaring the detention of businessman Samvel Karapetyan illegal indicates that the legal basis or enforcement of such detentions is not consistently upheld, undermining the characterization of a sustained proactive approach.

No specific "crypto custody license" exists. Armenia does not currently have a dedicated licensing regime for cryptocurrency custodians.

Armenia imposes licensing and capital requirements for cryptocurrency custodians, but no mandatory insurance or bonding.

No specific mandates. There are no specific regulatory mandates or technical requirements for cryptocurrency custodians regarding the use of cold storage (offline storage) for digital assets.

No specific definition. Given the absence of a dedicated regulatory framework for digital asset custody, there is no legal definition of a "qualified custodian" for cryptocurrencies in Armenia.

This means that clients would likely have no recourse through a regulatory-mandated insurance scheme in the event of theft, loss, or insolvency of a crypto custodian.

Armenia has specific laws and regulations, including the Law on Crypto-Assets (adopted May 29, 2025), that regulate crypto-asset service providers (including custodians) licensed by the Central Bank, with requirements for AML, transaction monitoring, record retention, and client protections, though explicit client asset segregation mandates are not detailed in the provided evidence.

Specifics: This law, originally adopted in 2004, has undergone several amendments. Crucially, amendments in 2022 specifically brought virtual asset service providers (VASPs) within the scope of obligated entities. This means VASPs are now subject to the same AML/CFT obligations as traditional financial institutions.

These amendments align Armenia with FATF Recommendation 15 on new technologies, which requires countries to regulate and supervise VASPs for AML/CFT purposes. The Travel Rule application to VASPs has been clarified as distinct from the core Recommendation 15 VASP regulatory requirements.

Identification and Verification of Identity:

Legal Entities: Obtain and verify the legal entity's name, legal form, address of registered office, registration number, and the names of individuals authorized to act on behalf of the entity.

Beneficial Ownership: Identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer, especially for legal entities and complex structures. This includes understanding the ownership and control structure.

Purpose and Nature of the Business Relationship: Understand the purpose and intended nature of the business relationship or transaction.

Source of Funds/Wealth: For higher-risk customers or transactions, VASPs may be required to ascertain the source of funds or source of wealth involved.

Ongoing Monitoring: Continuously monitor the business relationship and transactions undertaken by the customer to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile. This includes reviewing transactions for unusual patterns and ensuring documents, data, or information collected under the CDD process remain current and relevant.

Politically Exposed Persons (PEPs): Implement enhanced due diligence measures for customers identified as PEPs, their family members, and close associates.

Sanctions Screening: Screen customers and transactions against national and international sanctions lists.

Risk-Based Approach: Apply CDD measures according to the level of risk identified for each customer or transaction. This means higher-risk customers or transactions will require Enhanced Due Diligence (EDD), while lower-risk ones may permit Simplified Due Diligence (SDD) under specific conditions.

Reporting Obligation: If a VASP knows, suspects, or has reasonable grounds to suspect that funds, virtual assets, or other assets are the proceeds of a criminal activity, or are related to terrorist financing, it must immediately file a Suspicious Transaction Report (STR) with the Financial Monitoring Center (FMC) of the CBA.

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or to third parties that an STR has been filed or that an AML/CFT investigation is being conducted (the "no tipping-off" rule).

Period: Records related to customer identification data, beneficial ownership information, transaction data (including virtual asset addresses, transaction hashes, amounts, and timestamps), and any STRs filed must be kept for a minimum of five (5) years after the business relationship has ended or after the date of the transaction.

Data Security: VASPs must ensure the security and confidentiality of all collected data.

The Financial Monitoring Center (FMC) operates under the Central Bank of Armenia, but since July 2025, AML/CFT oversight has been expanded to include the State Revenue Committee’s Centralized Monitoring Center and CertScan system, along with new reporting obligations for designated non-financial entities such as lawyers, notaries, and accounting firms. Financial intelligence and monitoring are now shared across multiple agencies and private-sector gatekeepers, not solely the CBA’s FMC.

Role: The FMC acts as Armenia's Financial Intelligence Unit (FIU). It is responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) to law enforcement agencies for investigation. Obligated entities, including VASPs, must report all suspicious activities to the FMC.

Entity Targeted: Individuals and organized criminal groups involved in establishing and operating large-scale fraudulent cryptocurrency investment schemes, often promising high returns from "mining farms" or fake trading platforms. Violation Type: Large-scale fraud (often under Article 178 of the Criminal Code of Armenia), money laundering (Article 190), illegal entrepreneurship (Article 188), and sometimes other related criminal offenses. Outcome: Multiple arrests of individuals involved, ongoing criminal proceedings, freezing and seizure of assets, and international cooperation to track down perpetrators and recover funds. As these are complex criminal cases, final verdicts and sentences can take significant time.

Armenian authorities are conducting mass raids and investigating nearly 40 individuals for money laundering, indicating that the situation has progressed beyond the initial multiple arrests and asset freezes described in the claim.