AZG Armenian Daily #123, 06/07/2005
THE CENTRAL BANK OF THE REPUBLIC OF ARMENIA
STATEMENT
The Central Bank’s policy in the area of money transfers in the Republic of
Armenia
Integration of the Armenian economy into the world economy and volumes of
private money transfers growing year after year bring in new challenges.
These include:
– Proportional development of all possible establishments and instruments of
money transfers [some may be counted] under cooperation of the private and
public sectors;
– General public’s accessibility to the money transfers systems, and
ensuring warrants for safe and reliable functioning of such systems;
– Creation of qualitative criteria and defending user interests in the money
transfers area;
Exclusion of fraud, now widely practiced worldwide, via the money transfers
systems and prevention of using this for criminal offence and terrorism
funding.
In light of these challenges, the Central Bank sets its own objectives, as
follows:
a/ Discussing the possibilities and ways of development of the system with
the representatives of the private sector by rendering technical assistance
when needed;
b/ Contribute to a free competitive environment in this area in order to
make sure affordable and reliable payment services throughout Armenia;
c/ Establish clear and acceptable conditions for the money transfers
activities, and create a proper surveillance system specifically to take
money transmitters from shadow and have them operate within the legal
framework;
d/ Reduce the risks associated with the transfer of money via the money
transfers systems; and
e/ Rule out chances for money laundering and terrorism funding via the money
transfers systems functioning in Armenia.
Under the Armenian Law on `Payment and Settlement Systems and
Organizations’, the Central Bank will deal with these objectives by
clarifying legal status of money transmitters (remittance business
providers) (issuance of license to them) and regulating and supervising
their business.
A. Licensing
The legal status of money transmitters in Armenia will be clarified by way
of issuing a license to perform money transfers. To get a license, managers
of such organizations should comply with the qualification criteria, and the
organization itself should meet the requirements, set by the Central Bank.
B. Regulation
The Law authorizes the Central Bank to set safety, technical adequacy,
hardware and software environment and the recompensing amount requirements
to the money transmitters.
In connection with these requirements, the Central Bank’s policy is as
follows:
1. Safety and technical adequacy requirements to the location of business
To make sure both customers and employees of the organization are secure
while cash assets are authentic and reliably protected in performing cash
money transfers, the Central Bank has initially set strict requirements,
irrespective of the amount of currency in circulation. The organization
shall meet these requirements in performing money transfers in any place.
Apart from money transfers, the organization may only render FX
purchase/sale and postal services.
2. Hardware and software environment requirements
The hardware and software requirements cover verification, integrity and
confidentiality of payment and settlements documents and other related
information during an electronic exchange, and maintenance, limited
accessibility to and prevention of loss and/or distortion of electronic
information.
In the time ahead, the Central Bank’s requirements will be confined to
maintaining internally regulating documents and adhering to the provisions
laid down in such documents.
The Central Bank will periodically conduct monitoring of internal
regulations of money transmitters in order to identify associated risks and
develop proposals for minimization of such risks. In the meantime, the
Central Bank will closely cooperate with these organizations to find
compromising solutions to the arisen issues.
Later on, with a developing legal framework for circulation of electronic
payment and settlements documents, active involvement of interested parties
(banks and money transmitters organizations operating in Armenia) may
contribute to develop certain criteria/requirements covering the said
issues.
3. Requirements to the recompensing amount
The recompensing amount is designed to indemnify people making transfer of
money against possible losses if the money transferor organizations fail to
perform their professional obligations.
In the near future, in order to give shadow money transmitters a doorway to
operate within the legal framework, the Central Bank will determine a small
size of recompensing amount of AMD 500.000, the 500-fold of the minimum
salary.
In the future time, the Central Bank will intend to increase the
recompensing amount by way of determining differentiated sizes of such an
amount, depending on the value, amount, geography of transfers, and
applicable payment instruments, using accumulated statistical data and
holding multi-aspect discussions with the money transmitters.
C. Supervision
To evaluate, restrain and timely respond to the risks of customers of money
transmitters, the Central Bank will exercise off-site and on-site
supervision to carry out monitoring of potential risks and their extent, as
well as a detailed review of customer complaints and applications. The
Central Bank will resort to sanctions in case of infringements.
Supervision will be exercised in connection with the fight against money
laundering and funding of terrorism. The Armenian Law on `Legalization of
Criminal Proceeds and Combating Terrorism’ provides that organizations
dealing with money transfers should submit reports to the Central Bank.
On the way of facing challenges and resolving the tasks, the Central Bank
will always seek consultation with money transmitters. The Central Bank
expects that its cooperation with money transmitters would create
preconditions for broadened spectrum and higher quality of services from the
payment and settlements organizations in the near future, with the inclusion
of new affordable products and instruments.