Source: https://www.cba.am/en/sitepages/fmchelporganizations.aspx
Timestamp: 2020-08-10 22:01:15
Document Index: 12532088

Matched Legal Cases: ['art 1', 'art;\n2', 'art 1', 'art 2', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 5', 'arts 1', 'art 1', 'art 3', 'art 4', 'art 5', 'arts 1', 'art 8', 'art 1', 'art 3', 'art 1', 'arts 1', 'art 4', 'art 2', 'art 1', 'art 2', 'art 1', 'art 1', 'art 1', 'art 2', 'art 8', 'art 1', 'art 1', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 1']

On Rules for Filling in the Reporting Form 101
Reporting on currency exchange transactions
Reporting on parties to transaction
Language of filling in names/ titles
Calculation of deposit term
Subject of electronic mail accompanying a report
Filling in digital information
Change of Deposit Currency
Filling in parties to the transaction in cases of cash deposit on account by third party or of cash withdrawal from account by third party when reporting such transactions
Filling in the amount for currency exchange transactions
Reporting on increased deposit
Reporting on accrued interest on deposit
Reporting on several transactions below 20 million Armenian drams
Filling in STRs on suspicious business relationships
Reporting on several deposits below 20 million Armenian drams
Reporting on transactions in different currencies
Reporting on transactions between head office and branches
On Reporting Obligation of Notaries under the Republic of Armenia Law on Combating Money Laundering and Terrorism Financing
On Application of Certain Provisions of the Republic of Armenia Law on Combating Money Laundering and Terrorism Financing
Reasonable timeframe for identification and verification of identity
Periodicity of updating CDD data
Application of CDD measures to existing customers
Establishment of Beneficial Ownership
On the information to be included in the payment order by the financial institution ordering a wire transfer
On the first payment of non-face to face relationships
On STR related information sharing within the financial group
Establishment of the beneficial owner of a transaction or a business relationship
Restrictions on performing transactions of buying/selling real estate in cash​
On Reporting Obligation and Customer Due Diligence Requirements
Calculation of Reporting Term
Reporting on loans from financial institutions
Reporting on transactions with Government T-bills
Reporting of transactions with statutory capital
Exceptions from reporting requirement for financial institutions
Risk rating of domestic PEPs
Risk rating of non face-to-face transactions
Qualification of compliance officers of credit associations
1: Reporting on currency exchange transactions
Question: In cases when two accounts in different currencies are used for intra-bank spot transactions or for currency exchange, which account number should be entered in the field “Bank account number or unique reference code”?
Answer: The account number for the currency being sold should be entered in the field “Bank account number or unique reference code”.
2: Reporting on parties to transaction
Question: In cases when a natural person concludes a transaction on behalf of a legal entity for which he/she is not the authorized person, and the legal entity is not a customer of the bank, what are the rules for filling in the respective fields of the report on above-threshold or suspicious transaction/ business relationship?
Answer: The natural person should be indicated as a party to the transaction, and his/her identification data should be filled in the respective fields, whereas the name of the legal entity and other data on the transaction should be filled in the field 4.5 “Other information considered important on the transaction”.
3: Language of filling in names/ titles
Question: When should be the name/surname of the natural person or the name of the legal entity (under Section 5, “Parties to transaction”) filled in English (or in Latin letters)?
Answer: These fields should be filled in English (or in Latin letters) only in cases, when the respective data is available to the bank in English (or in Latin letters).
4: Calculation of deposit term
Question: In the field 5.2.2 “Term of deposit”, what are the rules for calculating the term?
Answer: The term in the field 5.2.2, “Term of deposit” is calculated in days.
5: Subject of electronic mail accompanying a report
Question: When submitting reports via the Lotus Notes system, what should be filled in the field “Subject” of the electronic mail?
Answer: The field “Subject” of the electronic mail should contain the indication “Reports to the Financial Monitoring Center”.
6: Use of brackets
Question: Should quotation marks be used when filling in text fields?
Answer: No, text fields should be filled in without quotation marks.
7: Filling in digital information
Question: Should the fields containing digital information be filled in whole numbers or the quotient should also be indicated?
Answer: In the fields “Amount of currency bought”, “Amount of currency sold”, “Amount in the given currency”, and “Equivalent amount in Armenian drams” figures should be filled in whole numbers without the quotient.
8: Change of Deposit Currency
Question: In cases when a currency exchange transaction is concluded under a multi-currency deposit agreement, what are the rules for filling in the reporting form?
Answer: When a currency exchange transaction is concluded under a multi-currency deposit agreement, the field 5.4 “Currency exchange” and its relevant data should be filled in, whereas in cases when, in addition to the exchange of currency, the interest rate for the deposit was also changed, a respective note should be entered in the field 4.5 “Other information considered important on the transaction”.
9: Filling in parties to the transaction in cases of cash deposit on account by third party or of cash withdrawal from account by third party when reporting such transactions
Question: Who is indicated as a costumer and a counterparty to the transaction in cases of selection of the fields “Cash deposit on account by third party” or “Cash withdrawal from account by third party” provided by point 4.2 of the reporting form?
Answer: In cases of selecting the fields “Cash deposit on account by third party” or “Cash withdrawal from account by third party” provided by clause 4.2 of the reporting form, i.e. in all cases when cash deposit on account or cash withdrawal from account is conducted by the person other than the authorized person (the latter mainly refers to cheque related transactions), the person who deposits on the account or withdraws from the account should be selected as “Transaction counterparty”. The person on whose account cash is deposited or from whose account cash is withdrawn should be selected as “Customer”.
10: Filling in the amount for currency exchange transactions
Question: What are the rules for filling in the fields 4.3 “Amount in original currency” and 4.4 “Amount in equivalent Armenian drams”, when under a currency exchange transaction the bank: 1. Sells Armenian drams and buys foreign currency; 2. Sells foreign currency and buys Armenian drams; 3. Converts one foreign currency into another.
Answer: When under a currency exchange transaction the bank: 1. Sells Armenian drams and buys foreign currency, the amount in Armenian drams (the currency sold) should be filled in the field 4.3 “Amount in original currency”. In this case, the same amount shall be filled in also in the field 4.4 “Amount in equivalent Armenian drams”; 2. Sells foreign currency and buys Armenian drams, the amount in the foreign currency (the currency sold) should be filled in the field 4.3 “Amount in original currency”. In this case, the Armenian dram equivalent of the transaction amount shall be filled in the field 4.4 “Amount in equivalent Armenian drams” at the average exchange rate in the currency market as published by the Central Bank; 3. Coverts one foreign currency into another, the amount in the sold foreign currency should be filled in the field 4.3 “Amount in original currency”. In this case, the Armenian dram equivalent of the bought currency shall be filled in the field 4.4 “Amount in equivalent Armenian drams” at the average exchange rate in the currency market as published by the Central Bank.
11: Reporting on increased deposit
Question: If the customer has an accrual deposit with a specific term of maturity and, for example, in one year after the initial deposit increases its amount by 25 million Armenian drams, what should be the term indicated in the report on increasing the amount of the deposit?
Answer: In this case the report on increasing the amount of the deposit should contain the field 5.2.2 “Term of deposit” indicating the term which if left until the repayment of the deposit as of the moment of increasing its amount.
12: Reporting on accrued interest on deposit
Question: In cases when the amount of repaid deposit is below the reporting threshold, but the sum total of the repaid deposit and the accrued interest is above that threshold, does this require filing report on over-threshold transaction with the Financial Monitoring Center?
Answer: No, the amount of accrued interest is not summed up with the amount of the deposit, and in cases when this sum total is above the reporting threshold there is no need to file a report on over-threshold transaction with the Financial Monitoring Center
13: Reporting on several transactions below 20 million Armenian drams
Question: If the account of a legal entity is debited for an amount above the threshold of 20 million Armenian drams to be credited on several other accounts in amounts individually below the said threshold, does this require filing a report on over-threshold transaction with the Financial Monitoring Center?
Answer: In cases when the account of a legal entity is debited for an amount above the threshold of 20 million Armenian drams to be credited on several other accounts in amounts individually below the said threshold and channeled to the payment of salaries, communal service fees or other similar purposes, there is no need to file a report on over-threshold transaction with the Financial Monitoring Center. This does not apply to the cases when the account of a legal entity is debited for an amount above the threshold of 20 million Armenian drams to be transferred to other legal entities in one or several transactions (including cross-border wire transfers).
14: Filling in STRs on suspicious business relationships
Question: If a suspicious transaction report is filed with the Financial Monitoring Center on a business relationship as opposed to that on a specific transaction, what should be filled in the respective fields of the reporting form on the amount and the currency of the transaction?
Answer: When a suspicious transaction report is filed, and the amount of the transaction cannot be specified, then zero (“0”) should be entered in the fields 4.3 “Amount in original currency” and 4.4 “Amount in equivalent Armenian drams”.
15: Reporting on several deposits below 20 million Armenian drams
Question: When the customer makes a deposit or increases it in amounts individually below the threshold of 20 million Armenian drams, does this require filing a report on over-threshold transaction with the Financial Monitoring Center?
Answer: If a deposit below the threshold of 20 million Armenian drams is increased by an amount below the said threshold, then even if the sum total of the deposit happens to be above the threshold, this does not need to be reported to the Financial Monitoring Center. Nevertheless, the cases when deposits are repaid and/or the respective amounts are received by customers having built up such deposits above the reporting threshold of 20 million Armenian drams should be reported to the Financial Monitoring Center. Above-threshold transaction reports are not filed also in cases when the term of maturity for built up deposits is extended.
16: Early termination of deposit
Question: What are the rules for indicating the term in the field 5.2.2 “Term of deposit” in case of early termination of a deposit agreement?
Answer: In case of early termination of a deposit agreement, zero (“0”) should be entered in the field 5.2.2 “Term of deposit”.
17: Reporting on transactions in different currencies
Question: What are rules for filling in the reporting form when the customer having a US dollar account with the bank receives an amount in euros above the equivalent of 20 million Armenian drams?
Answer: In cases when the customer having a US dollar account with the bank receives an amount in euros above the equivalent of 20 million Armenian drams, while he/she does not have a euro account, and the received amount is subject to conversion based on a respective agreement between the customer and the bank, on a written contract or on usual business practice, then two reports should be filed with the Financial monitoring Center. The first report should be filed on the receipt of funds to the account, while indicating in the field “Bank account number or unique reference code” the number of the transit account credited with euros. The second report should be filed on the conversion of currency, while indicating in the field “Bank account number or unique reference code” the number of the US dollar account credited with the converted amount.
18: Reporting on transactions between head office and branches
Question: In cases when a credit organization transfers funds from its account to that of its branch, does this constitute an exception from the obligation to report above-threshold transactions?
Answer: Transfers between the accounts of the credit organization and its branches are considered as relocation of own funds of the financial institution, which does not require filing a report on over-threshold transaction with the Financial Monitoring Center.
According to Part 1, Article 5 of the Republic of Armenia Law on Combating Money Laundering and Terrorism Financing (hereinafter: the Law), reporting entities shall file a report to the Authorized Body on any of the following transactions:
1) Transactions above the threshold of 20 million Armenian drams, excluding the transactions stipulated by Clause 2 of this Part;
2) Transactions related to real estate above the threshold of 50 million Armenian drams;
3) Suspicious transactions or business relationships, regardless of the amount stipulated by this Part.
The reporting obligation defined under Part 1 of the said article applies to notaries only with regard to the following transactions prepared or carried out for their clients (Clause 3, Part 2, of Article 5 of the Law):
a) Buying and selling of real estate; this does not apply to transactions for pledging of real estate as collateral. At the same time, if the contract to be verified is on buying and selling of real estate and on pledging (mortgage) of that property on behalf of a third party as a collateral (security for the repayment of debt), then a report should be filed on the said contract. As far as the instruments providing for an advance payment or prepayment are concerned
If a separate contract on the advance payment or prepayment is concluded above the established threshold of 50 million Armenian drams in the meaning of the reporting requirement under Clause 2, Part 1 of Article 5 of the Law, this shall require filing of a separate report by indicating in the field 1.4 “The nature of transaction” provision of advance payment or prepayment as the subject of the transaction. In such cases, a separate report shall be filed also upon the verification of the contract providing for a full payment of the contract price;
If the provision on the advance payment or prepayment is included in the main contract on buying and selling of real estate, and the price of the contract is above the established threshold of 50 million Armenian drams in the meaning of the reporting requirement under Clause 2, Part 1 of Article 5 of the Law, this shall require filing of one report only;
b) Managing of client money, securities, or other assets; for example:
Acceptance of deposits or maintenance of monetary funds or securities by the notary;
Contracts providing for trust management, borrowing or otherwise managing property;
Powers of attorney providing for the management of client property (including monetary funds or securities);
In the meaning of the reporting requirement under Clauses 1 and 2, Part 1 of Article 5 of the Law, reports should be filed only in cases when the transaction specifies a price (value) above the established reporting threshold;
c) Management of bank and securities accounts; for example powers of attorney for transactions with the accounts of other natural persons or legal entities.
In the meaning of the reporting requirement under Clause 1, Part 1 of Article 5 of the Law, reports should be filed only in cases when the transaction specifies a price (a maximum limit on the amount of transactions) above the established reporting threshold;
d) Provision of funds or other assets for establishment, operation, or management of legal persons; for example:
- Articles of incorporation of legal entities;
- Contracts on extending loans or providing other assets to legal entities for facilitating their regular operations.
e) Performing functions of establishment, operation, or management of legal persons, as well as alienation (acquisition) of contributions, shares and the like in the authorized capital (equity capital and the like) of legal persons, or alienation (acquisition) of stocks (equities, shares) of legal persons at a nominal or market value; which, in addition to the cases stipulated under the point “d” above, also include transactions for making investments in or alienating shares of the statutory capital of legal persons.
In the meaning of the reporting requirement under Clauses 1 and 2, Part 1 of Article 5 of the Law, reports should be filed only in cases when the transaction specifies a price (nominal or market value) above the established reporting threshold.
1: Reasonable timeframe for identification and verification of identity
Question: According to Article 15 of the Republic of Armenia Law on Combating Money Laundering and Terrorist Financing (hereinafter: the Law), the requirements on customer identification and verification of identity are allowed to be implemented also in the course of establishing a business relationship or concluding an occasional transaction or thereafter, within a reasonable timeframe. How this reasonable timeframe is determined?
Answer: Article 15 of the Law defines that the requirements on customer identification and verification of identity are allowed to be implemented also in the course of establishing a business relationship or concluding an occasional transaction or thereafter, within a reasonable timeframe, provided that the risk of money laundering or terrorism financing has been effectively prevented, and that this is necessary in order not to impair the normal business relationships. Based on the findings of the comparative analysis of the international practice and the practical experience on application of reasonable timeframes, customer identification and verification of identity should be conducted as soon as possible and in any case not later than 7 days after establishing the business relationship or concluding the occasional transaction. Further details on the reasonable timeframe may be prescribed by internal legal acts of reporting entities. In cases when customer identification and verification of identity are conducted after establishing a business relationship or concluding an occasional transaction, the necessary measures as specified by relevant internal legal acts should be undertaken to assure that ML/TF risks are effectively prevented.
2: Periodicity of updating CDD data
Question: How often the data obtained due to customer identification in the business relationship should be updated?
Answer: According to Article 16 of the Law, the periodicity of updating data obtained due to customer identification in the business relationship is determined by reporting entities. For the sake of ensuring that the above-mentioned data is kept up-to-date, it is recommended that at least an annual periodicity for the updating requirement is established.
3: Application of CDD measures to existing customers
Question: Do the customer due diligence requirements apply to the customers that existed before the adoption of the Law?
Answer: Yes they do. Implementation of the customer due diligence requirements to the customers that existed before the adoption of Law should be based on materiality and risk pertinent to each customer.
4: Establishment of Beneficial Ownership
Question: When considering the requirements under Clause 2, Part 5 of Article 16 and Parts 1 and 2 of Article 27 of the Republic of Armenia Law on Combating Money Laundering and Terrorism Financing, as well as the requirements under Part 1 of Article 9 of the Republic of Armenia Law on Combating Money Laundering and Terrorism Financing, Part 3 of Article 66 and Part 4 of Article 36 of the Republic of Armenia Law on State Registration of Legal Entities, State Recordkeeping of Separated Divisions of Legal Entities, Enterprises and Sole Proprietors, what shall reporting entities do to identify and (or) verify the identity of the beneficial owner of a legal entity, including in case of an indefinitely long chain of legal entities?
Answer: Part 5 of Article 16 of the Republic of Armenia Law on Combating Money Laundering and Terrorism Financing (hereinafter referred to as the Law) stipulates that reporting entities should determine whether the customer is acting on behalf and (or) for the benefit of another person. Reporting entities should “establish any beneficial owner and, as applicable, identify the beneficial owner and verify his identity, in accordance with Parts 1 to 4 and Part 8 of this Article”.
This requirement is driven by FATF Recommendations 10 and 22, which specify that reporting entities should – as part of customer due diligence process – identify beneficial owners and undertake adequate measures to verify the identity of the beneficial owner, thus ensuring that they have information of beneficial ownership. In particular, when a customer is a legal person or arrangement, reporting entities should have information on those who own and control the customer involved.
According to Part 1 of Article 9 of the Law, in case of registering a legal person the founders shall be obligated to file a declaration on the beneficial owners of the legal person with the state authority in charge of registering legal persons (hereinafter referred to as the State Registry). Moreover, pursuant to Part 3 of Article 66 of the Republic of Armenia Law on State Registration of Legal Entities, State Recordkeeping of Separated Divisions of Legal Entities, Enterprises and Sole Proprietors, in case of making changes in the statutory capital or in the composition of the shareholders, legal persons shall be obligated to file with the State Registry a declaration on beneficial owners as prescribed by the Law.
This requirement stems from the FATF Recommendation 24 defining that countries should ensure that there is adequate, accurate and timely information on the beneficial ownership and control of legal persons.
2014 FATF Guidance on Transparency and Beneficial Ownership (hereinafter referred to as the Guidance) reflects on the identification of beneficial owners of legal persons, with its Clause 32 defining the successive steps to be taken by reporting entities (and by the State Registry). Particularly, financial and non-financial institutions should identify and verify the identity, and the State Registry should establish:
The identity of the natural persons (if any, as ownership interests can be so diversified that there are no natural persons, whether acting alone or together, who exercise control of the legal person through ownership) who ultimately have a controlling ownership interest in a legal person; and
To the extent that there is doubt as to whether the persons with the controlling ownership interest are the beneficial owners, or where no natural person exerts control through ownership interests, the identity of the natural persons (if any) exercising control of the legal person through other means;
Where no natural person is identified under (1) or (2) above, the relevant natural person who holds the position of senior managing official.
Hence, in all cases where it is impossible to identify and (or) verify identify of the natural persons specified in (1) and then in (2), FATF Recommendations allow to stop in the process of identifying and (or) verifying identity of the beneficial owners of the legal person once the identity of the natural person acting as the senior managing official of the legal person has been established. It is worth mentioning that Clause 14, Part 1 of Article 3 of the Law stipulates that a member of the management and (or) executive body of a legal entity can also be recognized as the beneficial owner.
2014 FATF Guidance on Transparency and Beneficial Ownership stipulates the natural persons who may exercise control through positions held within a legal person. Such are natural person(s) responsible for strategic decisions that fundamentally affect the business practices or general direction of activities of the legal person; or natural person(s) who exercise(s) executive control over the daily or regular affairs of the legal person through a senior management position, such as a chief executive officer (CEO), chief financial officer (CFO), managing or executive director, or president[1​].
More details around the clarifications provided in the Guidance can be found at http://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-transparencybeneficial-ownership.pdf​.
In case the last step in the succession of measures undertaken does not lead to a positive result, then financial and non-financial institutions should refuse the transaction or business relationship and consider recognizing it suspicious as prescribed under Parts 1 and 2 of Article 27 of the Law, and the State Registry should refuse the registration as prescribed under Part 4 of Article 36 of the Republic of Armenia Law on State Registration of Legal Entities, State Recordkeeping of Separated Divisions of Legal Entities, Enterprises and Sole Proprietors.
[1] 2014 FATF Guidance on Transparency and Beneficial Ownership, pages 15-16
5: On the information to be included in the payment order by the financial institution ordering a wire transfer
Question: Regarding the requirement of Part 2 of Article 20 of the Republic of Armenia Law on Combating Money Laundering and Terrorism Financing, is the financial institution ordering a wire transfer obligated to include the entire information, which is obtained and maintained under Part 1(3) of Article 20, in the payment order accompanying the transfer?
Answer: According to Part 2 of Article 20 of the Republic of Armenia Law on Combating Money Laundering and Terrorism Financing (hereinafter referred to as the Law):
“For all wire transfers, the ordering financial institution should include the information specified under Part 1 of this Article in the payment order accompanying the transfer”.
Part 1 of Article 20 of the Law, in turn, defines the scope of information that the financial institution ordering a wire transfer is obligated to obtain and maintain. In particular, among other data specified in Part 1 of Article 20 of the Law, the financial institution ordering a wire transfer is obligated to obtain and maintain also the details of the identification document for natural persons or individual identification number (state registration, individual record number etc.) for legal persons.
This requirement stems from the FATF Recommendation 16, which defines that in order to prevent terrorists and other criminals from having unfettered access to wire transfers for moving their funds, as well as to detect such misuse when it occurs, information accompanying wire transfers should always contain:
1) The name of the originator;
2) The originator account number where such an account is used to process the transaction;
3) The originator’s address, or national identity number, or customer identification number, or date and place of birth;
4) The name of the beneficiary; and
5) The beneficiary account number where such an account is used to process the transaction.
Hence, the requirement of the FATF Recommendation 16 is that information accompanying wire transfers includes any of the below-stated data on the natural person who originates the transfer:
- Address; or
- National identity number; or
- Customer identification number; or
Consequently, the obligation of the ordering financial institution under Part 2 of Article 20 of the Law would be considered to be met if the payment order accompanying the wire transfer includes any of the above-specified identification data of the originator.
6: On the first payment of non-face to face relationships
Question: Does the requirement stipulated by Clause 40 of the Regulation on Minimum Requirements to Reporting Entities in the Field of Preventing Money Laundering and Terrorism Financing (hereafter-Regulation), apply to cases, when the reporting entity based on the outcomes of a risk assessment, assesses a non-face to face business transaction or relationship as medium risk according to Clause 22.1 of the Regulation?
Answer: According to Clause 27 (6) of the Regulation, non-face to face business transactions or relationships are identified as ML/TF high-risk criteria, which means that enhanced costumer due diligence measures, should be applied by reporting entities.
As a mitigation measure related to the risk of the physical absence of the costumer, in addition to the enhanced due diligence measures, Clause 40 of the Regulation obliges reporting entities in case of non-face to face relationships to carry out the first payment through an account in the customer’s name with a financial institution, which meets the requirements defined under Sub-Clauses “a” to “c”, Clause 3, Part 8 of Article 16 of the Law.
This requirement stems from the FATF Recommendation 10, which also envisages it as a mitigation measure to high-risk business relationships.
Hence, in cases when the reporting entity conducts a risk assessment according to Clause 22.1, prescribes relevant mitigation measures related to the risk of physical absence of the costumer in its internal legal acts (i.e. limiting the amount of the transactions, restraining the groups of costumers using the product to only residents and physical persons, obtaining the costumer due diligence data from partner financial institution, etc.), consequently assesses a non-face to face business transaction or relationship as medium risk, and sends the outcomes of the assessment to the Financial Monitoring Centre of the Central Bank of Armenia as prescribed by the 4th Chapter of the Regulation, the application of the requirement prescribed by Clause 40 of the Regulation is not necessary.
7: On STR related information sharing within the financial group
Question: Does the requirement stipulated by the Clause 5, Article 6 of the AML/CFT law prohibit the members of the financial groups from information sharing on STRs?
Answer: Part 1 of Article 23 of the AML/CFT law provides that financial groups should have in place and apply group-wide internal legal statutes aimed at the prevention of money laundering and terrorism financing. Based on Clause 16, Part 1 of Article 23 financial groups should have procedures for sharing information within the group for the purpose of combating money laundering and terrorism financing, which also covers information sharing on STRs. This interpretation stems from the FATF recommendation 18 and 21, which envisage information sharing on STRs under the information shared for the purposes of AML/CFT and do not consider it as “tipping off”. Hence, the interpretation of the above-mentioned Articles of the AML/CFT Law requires the financial group members to share information on STRs and other AML/CFT related issues.
8: Establishment of the beneficial owner of a transaction or a business relationship
Question: Can the beneficial owner of a transaction or a business relationship be a minor?
Answer: According to the Article 3 (1) (14) of the Republic of Armenia Law on Combatting Money Laundering and Terrorism Financing (hereafter the Law), the beneficial owner of a transaction or business relationship shall be the natural person:
a)	who on behalf or for the benefit of whom the customer in reality acts, and/or
b)	who in reality controls the customer or the person on behalf or for the benefit of who, the transaction or the business relationship is conducted, and/or
c)	who owns the customer which is a legal person, or
d)	the person on behalf or for the benefit of whom the transaction or the business relationship is conducted.
Neither the Law, nor the international standards contain requirements with regard to the age of majority of the customer. Thus, a minor may also be a beneficial owner in case he/she corresponds to one of the above-mentioned criteria of the Law. Nevertheless, for the purposes of effective and comprehensive establishment of the beneficial owners, the regulations with regard to the dispositive capacity of citizens are also important. Particularly:
•	The Article 24 of the Republic of Armenia Civil Code, envisages that the civil law dispositive capacity, that is the capacity of a citizen to acquire and exercise civil law rights by his actions, to create for himself civil law duties and to fulfill them, arises in full with the attainment of the age of 18.
•	At the same time, according to the Article 29 of the Republic of Armenia Civil Code, transactions on behalf of the minors who have not attained the age of 14, are conducted by their parents, adopters, guardians (hereafter legal representatives) with the exceptions being very small everyday transactions, transactions requiring neither notarial certification, nor state registration; transactions related to disposition of assets provided by the legal representatives. It should be noted that, even in these exceptional cases the legal representatives are liable in case of damage.
Hence, in all cases where the beneficial owner of the transaction or the business relationship is a minor who has not attained the age of fourteen years, the bank should consider as a beneficial owner also his/her legal representatives and perform the actions required under the Article 16 (5) of the Law.
9. Restrictions on performing transactions of buying/selling real estate in cash
Question: What measures should be applied by reporting entities in relation to the fulfillment of the prohibition of making cash payments in transactions of buying/selling of real estate above 50 million Armenian drams for the part of the transaction exceeding that threshold?
Answer: The prohibition of making cash payments for the part of the transaction exceeding the threshold of 50 million Armenian drams in transactions of buying/selling of real estate is envisaged in Article 15, part 3 of the AML/CFT Law with the aim of mitigating the ML risks arising from the use of cash in the real estate market.
In practice, the above-mentioned prohibition shall be fulfilled by those reporting entities, which would be engaged in transactions of buying/selling of real estate, such as banks, credit organizations, notaries, relators, as well as by other relevant reporting entities. In this regard, the main obligation of the reporting entities is to properly raise awareness and consult customers about the provision of the Law. In particular, for different types of reporting entities, the said consultations and awareness raising should be done as follows:
Banks may be engaged in transactions of buying/selling of real estate, when the customer makes cash withdrawals and/or deposits with the aim of buying/selling of real estate, or when the bank provides mortgage loans.
When, for example, the customer makes a cash withdrawal amounting to 65 million Armenian drams and states that the aim of the withdrawal is the buying of real estate, the bank should properly inform the customer on the prohibition of Article 15, part 3 of the AML/CFT law and suggest conducting the transaction through a bank transfer for the part exceeding the threshold, as well as notify about the risk of invalidity of the transaction in case of non-compliance. After notification, if the customer insists for the withdrawal of the full sum, the bank should consider recognizing the transaction as suspicious and filing a report on it.
In relation to mortgage loans, which are tripartite agreements (the buyer-borrower, the bank and the seller) it is essential to add a provision for performing the part of the transaction exceeding the threshold through a non-cash payment.
In the above-mentioned cases, when interpreting the provision of Article 15, part 3, the following must be taken into account:
-	The provision does not imply only making a bank transfer from the buyer`s account to the seller`s.
-	Within the meaning of the provision, non-cash also means making a cash deposit on the seller`s account regardless if it is done by the seller or the buyer. In this sense, it is important not to confuse the meaning of “cash payment” used in the aforementioned provision with the meaning of “transactions connected with cash” used as the requirement for mandatory transaction reporting.
In any case, it is essential to present documents justifying the transaction of buying/selling of real estate, e.g. the agreement.
Notaries, when fulfilling the provision, should either indicate in the agreement the obligation of the buyer to make a non-cash payment for the part of the transaction exceeding the threshold envisaged in Article 15, part 3 of the AML/CFT law, or in another form, e.g. in written, properly informing the parties of the transaction on the respective provision and the risk of invalidity of the transaction in case of non-compliance. In cases when the notary finds out that the parties of the transaction purposefully decrease the value of the real estate in order to evade the obligation of making non-cash payment as envisaged in the Article 15, part 3 of the AML/CFT law, the notary should consider recognizing the transaction as suspicious and filing a report on it.
Overall, it must be stressed that within the obligations specified under Article 15, part 3 of the AML/CFT law, it is not essential to notarize the transaction only in case of providing documents justifying the bank transfer, except for the cases when the payments have already been made at the time of notarization. In this case, documents justifying the bank transfer should be presented to the notary.
Realtors engage in buying/selling of real estate when they are brokering them. Realtors, when acting as brokers, or when drafting the agreement of buying/selling of real estate, should properly inform the parties of the transaction on the provision of Article 15, part 3 of the AML/CFT law and the ways for maintaining it according to the above-mentioned explanations and views.
Other reporting entities who, in some manner would be engaged in buying/selling of real estate, should properly inform the parties of the transaction on the provision of Article 15, part 3 of the AML/CFT law and the ways maintaining it according to the above-mentioned explanations and views.
1: Calculation of Reporting Term
Question: What is the reference point of time for counting down the three-day period of filing an above-threshold report to the Financial Monitoring Center?
Answer: The reference point of time for counting down the three-day period of filing an above-threshold report is the next day of concluding the transaction to be reported. For example, if the transaction was concluded on Thursday March 4, the three-day period would start on Friday March 5. Here one has to take into consideration that the three-day period includes business days only; in our example, the three-day period would end on Wednesday March 10 (as March 8 is a non-working day).
2: Reporting on loans from financial institutions
Question: When a financial institution receives a loan from a bank or credit association, is that transaction reportable to the Financial Monitoring Center?
Answer: No, receipt of loans by financial institutions from banks or credit associations is not reportable to the Financial Monitoring Center.
3: Reporting on transactions with Government T-bills
Question: Does the purchase or sale of Government T-bills need to be reported to the Financial Monitoring Center?
Answer: When purchasing or selling Government T-bills, the transaction has to be reported to the Financial Monitoring Center only in case of secondary allocation; i.e. when the any of the two parties of the transaction is not a specialized entity.
4: Reporting of transactions with statutory capital
Question: Does the body in charge of registering legal entities (the State Registry) need to file a report with the Financial Monitoring Center on the sale or purchase of shares in the statutory capital of commercial companies, when any of the two parties of the transaction is a public authority?
Answer: Yes, the body in charge of registering legal entities (the State Registry) needs to file a report with the Financial Monitoring Center irrespectively of the fact whether any of the two parties of the transaction is a public authority.
5: Exceptions from reporting requirement for financial institutions
Question: When a financial institution has received or provided a loan, or when the statutory capital of the financial institution has been changed in an amount above 20 million Armenian drams, does the financial institution need to file an above-threshold report with the Financial Monitoring Center?
Answer: The exceptions from the reporting requirement for financial institutions are established by Clause 5 of the Guidance on Completion and Submission of the Reporting Form 001 as approved by the Decree of the Board of the Central Bank of Armenia No 231-N from July 31, 2008, as well as by Clause 9 of Annex 2 of the Rules for Registration of Banks, the Terms and Procedure for Submission of Above-Threshold and Suspicious Transaction Reports by Banks as approved by the Decree of the Board of the Central Bank of Armenia No 296-N from October 6, 2009 do not provide for the types of transactions in question. Therefore, financial institutions needs to file a report with the Financial Monitoring Center in cases when they receive or provide a loan, or when the statutory capital of the financial institution has been changed in an amount above 20 million Armenian drams.
6: Risk rating of domestic PEPs
Question: In relation to the persons who are or have been entrusted with prominent public, political or social functions in the Republic of Armenia, does the anti-money laundering and counter terrorist financing legislation require that such persons are considered as high-risk?
Answer: No, the Law on Combating Money Laundering and Terrorist Financing requires that the persons who are or have been entrusted with prominent public, political or social functions in a foreign country or state are considered as high-risk.
7: Risk rating of non face-to-face transactions
Question: Is it required that all non face-to-face transactions or business relationships are considered as high-risk?
Answer: Yes, according to Clause 22 of Regulation on the Minimal Requirements Stipulated for the Financial Institutions in the Area of Combating Money Laundering and Terrorist Financing, establishment of business relationships or occasional transaction without face-to-face communication is considered as high-risk, while Clause 2 of the same rules provides for the minimum additional measures that financial institutions should take when establishing business relationships or conducting occasional transactions in non face-to-face regime.
8: Qualification of compliance officers of credit associations
Question: Is there a requirement for internal compliance officers of credit associations to be qualified by the Authorized Body?
Answer: According to Clause 2 of Article 22 of the Law on Combating Money Laundering and Terrorist Financing, the staff of the internal compliance unit of reporting entities – including that of credit associations – shall pass qualification in the manner and based on the professional relevance criteria established by the Authorized Body. Part 1 of Article 11 of the same Law defines that the Authorized Body shall establish the minimal requirements for the qualification of internal compliance staff. Currently such minimal requirements are not established (except for those on banks’ compliance staff); therefore, the requirement for internal compliance officers of credit associations to be qualified by the Authorized Body is not in effect.