Armenian Banks Implement Strict New Rules to Prevent Evasion of International Sanctions

Under Decision No. 21-N approved by the Central Bank of Armenia, changes have been made to the minimum requirements for internal controls within banks. The new regulations mandate that banks establish risk-based systems to identify, assess, and reject any transactions designed to bypass international sanctions.

New Compliance and Control Standards

This enhanced oversight is not limited to existing bank clients. Financial institutions are now obligated to conduct detailed checks on:

• all parties and intermediaries involved in a transaction,
• geographical factors and the currency of the transaction,
• the origin of goods, services, and technologies.

The 4th Banking Regulation has been updated with a new section, Chapter 15.1, which requires banks to appoint a dedicated risk management officer and submit regular reports to the executive board. According to an August 13 report by The Moscow Times, any updates to sanctions lists or changes in client data must be reviewed within one working day using automated tracking systems.

The Russian Factor and Tighter Restrictions

According to intellinews.com, these new regulations are specifically aimed at preventing the evasion of Western sanctions imposed on Russia. Following the geopolitical fallout of 2022, Russian citizens opened over 70,000 bank accounts in Armenia by July 2022. However, since late last year, Armenian banks have increasingly begun denying account-opening requests from Russian nationals.

Addressing this shift, financial advisor Natalya Smirnova wrote on Telegram (as cited by intellinews.com):

"If your company has founders who are under sanctions, this can serve as grounds for refusing incoming funds, even if you yourself are not subject to any restrictions."

The Broader Political Context

This tightening of financial controls coincides with a shift in Yerevan's geopolitical alignments. According to a poll conducted in May, 75% of Armenians support joining the European Union. At the same time, Prime Minister Nikol Pashinyan attended the Eurasian Economic Union (EAEU) intergovernmental council meeting on August 7 after an 18-month absence. According to analysts, this suggests that rather than formally exiting the Russian-led economic bloc, Armenia is quietly minimizing its strategic utility to the alliance.