NO LONGER UNDER "SPECIAL ATTENTION"

When the FATF - the Financial Action Task Force - included Azerbaijan on its list of countries demanding so-called "special attention", many didn't believe that it would be possible to apply its recommendations so quickly and leave the list of undesirables. However, the FATF made a proviso that although Azerbaijan had some deficiencies in anti-money laundering / combating terrorist financing (AML/CFT), the government had the political will and a special action plan to eliminate them.

And the result was not slow to appear. Already this month, Azerbaijan may be removed from the group of countries demanding "special attention". At least Elman Rustamov, head of the Central Bank of Azerbaijan, is optimistic.

Azerbaijan's success in realizing the action plan, including improving national legislation and increasing the functionality of the Financial Monitoring Service, were noted in June 2010 at a plenary session of the FATF. It was recognized as expedient to begin the process of removing Azerbaijan from the list of countries in the third group. Discussion of this issue will take place on 18 October at a plenary session of the FATF in Paris.

Adisirin Qasimov, director of the Financial Monitoring Service of the Central Bank of Azerbaijan, spoke to our correspondent about the government's tasks and further plans for counteracting the legalization of criminal incomes and the financing of terrorism:

- What measures were necessary for the FATF to remove Azerbaijan from the list of countries demanding special attention? If this decision is not accepted at the October meeting of the FATF, when should we expect the next hearing on the matter?

- On the basis of a decision made at the G-20 summit in London in 2009, the FATF assessed almost 140 countries on the existing situation in counteracting the legalization of money and other property obtained through criminal means and the financing of terrorism.

This was then discussed at the plenary session of the FATF in October. It should be underlined that the results of an assessment of Azerbaijan concluded in 2008 by the committee of experts from Moneyval of the Council of Europe, were used as a basis.

But two years ago Azerbaijan had not yet adopted the principal law on AML/CFT anti-money laundering / combating the financing of terrorism, and the Financial Monitoring Service was not in place. Therefore, Moneyval put forward some recommendations for improving the system of combating money laundering and the financing of terrorism in Azerbaijan. These recommendations focused on developing the relevant legislative base and creating a financial monitoring organisation.

Taking this assessment report into account at the October session of the FATF last year, a decision was taken to include Azerbaijan, along with 24 other countries, on the list of countries demanding "special attention".

In February 2010, at a plenary session of the FATF, these countries were subdivided into three groups according to existing risks in the sphere of AML/CFT: 

- Countries with essential shortcomings in AML/CFT, resulting in sanctions being applied;

- Countries with deficiencies in AML/CFT and not cooperating with FATF;

- Countries with deficiencies in AML/CFT, but with the political will and a special action plan to eliminate them.

At the end of the assessment, Azerbaijan was placed in the third group of countries. A February 2010 statement by the FATF underlined the positive tendencies in the development of AML/CFT in Azerbaijan. The presence of strong political will in this sphere was especially noted. The FATF also considered that the start made on a comprehensive action plan to develop an AML/CFT system was a positive sign.

At the same time, it was recommended that Azerbaijan, in cooperation with the FATF and Moneyval, brought the system of AML/CFT into line with international standards. Relevant measures have been taken to implement these recommendations. In conformity with the requirements of the FATF, a new law on AML/CFT was adopted on 5 March 2010 and the corresponding decree by the President of Azerbaijan was signed on 17 March. The proper functioning of the Financial Monitoring Service was given the go-ahead at the same time. On the basis of the legislation on AML/CFT, all the necessary statutory acts have been approved to establish a mechanism for maintaining the practical work of the Financial Monitoring Service. A system to gather data from the subjects of monitoring has been set up.

The efforts undertaken by Azerbaijan to develop the AML/CFT system were highly appreciated at the regular plenary session of the FATF in June 2010. At the same session, a decision was taken to begin procedures to remove Azerbaijan from the FATF's list. We should note that of the 25 countries, this decision was adopted only with regard to Azerbaijan and Qatar. The FATF dispatched an assessment delegation comprising high-ranking officials to Azerbaijan to implement this decision. The mission took place on 7-8 September 2010. The delegation familiarized itself with Azerbaijan's achievements in AML/CFT. In a nutshell, Azerbaijan's removal from the list of countries demanding "special attention" is expected at the next plenary session in October.

- What will Azerbaijan's removal from this list mean and what further actions will be taken to further improve its position in the FATF?

- Neither sanctions nor restrictive measures were applied against the country's financial system or financial institutions as a result of its inclusion on the list. Such measures were not even envisaged in the FATF's decision. Its statement said that Azerbaijan cooperated fully with the international community on AML/CFT. At the same time, the country had a strong political will to eliminate certain drawbacks in its legislation.

Thus Azerbaijan's removal from this list facilitates a further strengthening of the international image of the reliability of its financial system. All foreign financial institutions and investors will still have great confidence in the transparency and reliability of Azerbaijan's financial system with regard to AML/CFT.

We should underline that the assessment of the efficiency of our AML/CFT system by the relevant international organizations is on-going. And Azerbaijan is taking heed of it. Within the limits of the combat strategy constructed to counteract the legalization of money and financing of terrorism, the necessary reforms are being consistently enacted.

For example, the Financial Monitoring Service has devised and accepted a strategy for 2010-13. It has been developed not only on the basis of recommendations from the FATF and Moneyval, but also from other international organizations. At the same time, an annual plan of work for the Financial Monitoring Service has been drafted and is now being implemented.

- To what extent do changes made by the Financial Monitoring Service to the list of states not cooperating on AML/CFT, depend on the FATF?

- On the basis of rules endorsed by the country's Cabinet of Ministers, the service has prepared a list of the countries which are not cooperating on AML/CFT. According to these rules, the list of such states is formed according to certain criteria and is coordinated with the Ministry for Foreign Affairs. While drawing it up, statements and decisions of the United Nations, the Council of Europe, the OSCE, the Organization for Economic Cooperation and Development (OECD), the IMF, the FATF, Moneyval and other international institutions are considered. The removal from this list of a number of countries contributed to the execution of the obligations to the FATF and other international organizations as well as it helped to the realization of relevant measures.

- To what extent is Azerbaijan ready for the next assessment by Moneyval?

- Azerbaijan possesses a strategy for combating the legalization of money obtained through criminal means and the financing of terrorism. The measures being implemented in Azerbaijan to develop an AML/CFT system in line with international requirements are systematic and consecutive. These measures contribute further to the strengthening of the country's international image. Therefore, the country is ready for an assessment of its AML/CFT system by any international organization, and any international assessment would yield positive results. The next assessment by Moneyval could be held in 2012 or 2013.

By the way, henceforth, the preparation of reports to assess the development of the AML/CFT system is not only based on FATF or Moneyval. For example, the US State Department's August 2010 report on terrorism in countries during 2009 noted Azerbaijan's successful conduct of the struggle against terrorism and the financing of terrorism. The report also highlighted Azerbaijan's achievements in the development of its AML/CFT system. (http://www.state.gov/documents/organization/141114.pdf)

- Have there been cases (since the beginning of the service's work) of legalizing dirty money and property received by criminal means for the financing of terrorism in Azerbaijan?

- The key function of any financial monitoring body is to reveal the presence of elements of money-laundering and the financing of terrorism in financial operations by analysis of the data presented by the subjects of monitoring. As I have already noted, the system for providing the relevant data is already fully developed. As of now, about 20,000 such data have been presented to our service. International practice shows that any newly created financial monitoring body needs a minimum of one to two years to achieve results once the database is formed. From this point of view, the database of the Financial Monitoring Service has just begun operations. However, based on the results of studies, the service has suspected some bodies of financing terrorism. This information was handed over to the relevant bodies in the legally established order.

- Is it planned to expand the range of activities to be monitored by the Financial Monitoring Service?

- Azerbaijan's law on AML/CFT has been drawn up according to international standards and advanced international experience and provides for the application of the latest methods to combat money-laundering and the financing of terrorism. Therefore, the legislation covers completely all the activity necessary. The new legislation has established all the subjects to be monitored and the bodies to supervise them within the scope of AML/CFT. It is not planned to expand the list.