By Armen Zakarian and Hrach Melkumian
The Armenian parliament began debating on Tuesday legislation that would give Armenia’s Central Bank sweeping powers to punish commercial banks and individuals suspected of involvement in the financing of international terrorist organizations.
The Armenian government says the package of amendments in the country’s banking laws, drafted by the Justice Ministry, reflects its international obligations to combat terrorism and money laundering.
Under those amendments, the Central Bank (HKB) will be allowed to block any financial transaction by those lending institutions or individuals that are suspected of “financing terrorism” or using “resources acquired in a criminal way.” Those entities would face serious sanctions if they fail to prove their innocence. The Central Bank would be required to draw up specific rules aimed at preventing money laundering and terrorism funding.
The proposed measures, if they are approved by the National Assembly, will signal a major toughening of Armenia’s liberal banking legislation. The existing regulations do not require local banks to check the origin of their cash deposits. They are also banned from disclosing individual bank deposits to law-enforcement agencies without a court order.
According to a draft amendment to the Armenian Law On Banks and Banking Activity, the HKB will set a detailed list of information which Armenian and foreign nationals will have to provide when opening bank accounts.
The legislative package, branded as too ambiguous and discretionary by critics, follows the Armenian authorities’ pledge to fully cooperate with the United States in countering international flow of money to anti-Western terror groups. The matter was on the agenda of a January meeting in Yerevan of the intergovernmental U.S.-Armenia Task Force. Finance and Economy Minister Vartan Khachatrian said at the time that Armenian officials assured their American counterparts that “if we discover that any of our banks has accounts that could possibly be used for terrorist acts…they will be immediately frozen.”
International cooperation against terrorism funding has been a key priority in U.S. foreign policy since the September 11 terror attacks in New York and Washington.
Some opposition lawmakers criticized the proposed amendments. One of them, Arshak Sadoyan, claimed that they are at odds with the presumption of innocence and that a mere suspicion must not warrant strict legal action. Justice Minister David Harutiunian, however, countered, that the sweeping measures sought by the government are universally accepted.
In a related development, a senior Armenian official said on Tuesday that the threat of international terrorism is also acute in the volatile South Caucasus. Addressing an international anti-terrorism seminar in Yerevan, Deputy Foreign Minister Tatul Markarian said Armenia, Azerbaijan and Georgia should jointly tighten their export controls, enhance border security and curb illegal trafficking of drugs, weapons and money across the region.
The two-day seminar was organized by the Armenian Foreign Ministry and the Euro-Atlantic Partnership Council, a NATO-led cooperation framework.