Category: 2020

It was not until July 2018 that Avetisyan was designated as an “unacceptable risk” by Cayman National.

In an internal memo, Managing Director Nigel Gautrey warned the bank’s Compliance and Risk Committee that Armenia’s former head of customs presented a “material” risk to the company.

“This is an ongoing PEP relationship where there are doubts in my view about the legitimacy of the original beneficial owner’s wealth, given his dismissal from public office due to corruption,” wrote Gautrey, citing an allegation that had been aired in the media but was never substantiated.

“Whilst there is no evidence of any wrong doing [sic] via Golden Group Limited the reputational risk of the Bank is material,” said Gautry. He added that, while there were no allegations of wrongdoing on the part of Artashes Avetisyan, the son and beneficial owner of the company, “it is clear that Golden Group Limited and its resort/hotel interests remain ‘family businesses’.”

The bank sent the client a 30-day account closing notice, with no explanation, and the relationship was terminated in September 2018.

Four months later, the bank received a request for information about the account from the Isle of Man’s Financial Intelligence Unit (FIU), which was acting on “received information.”

That’s when Cayman National’s compliance officers took another look at their former client and discovered press reports about the NSS investigation and the allegations that the Avetisyans’ hotels may have been built with illicit cash.

In a suspicious activity report filed to the FIU in July 2019, they wrote that they were “making this disclosure on the basis that laundered funds used in the acquiring and development of the Golden Palace Hotels may have been processed through our accounts.”

More than $10 million had passed through Golden Group’s British pound, euro, and US dollar accounts, statements show. Most of the deposits came from the hotels’ Armenian holding company, Golden Palace Hotel LLC, and Armen Avetisyan himself.

The largest recipient of funds from Golden Group’s US dollar account — $6.72 million — was Hayk Tshshmarityan, Avetisyan’s brother-in-law. Most of the funds appear to have originated from the Armenian firm Golden Palace Hotel LLC, which made a series of $1 million to $2 million deposits into the Isle of Man account, which it described as “prepayment for goods.” A few days later, sums of almost the same value would be transferred to Tshshmarityan.

The transactions, and what appeared to be Golden Group’s attempt to justify the movement with a $9.75 million loan agreement between Avetisyan and Tshshmarityan, left bankers confused and asking for further information. It is not clear from the leaked documents if these issues were resolved.

Cayman National said it does not comment on individual clients, but stated that “it is committed to maintaining the highest standards of conduct in all of its dealings.”

The bank said it “maintains stringent anti-money laundering and KYC procedures and is conscious at all times of its obligations with regard to politically connected individuals. [The bank] has always cooperated fully with the authorities in relation to suspicious transactions or criminal or regulatory investigations.”

Armen Avetisyan and Artashes Avetisyan declined via their lawyer to respond to detailed questions. Tshshmarityan, who has stayed out of the public eye since 2005, could not be reached for comment.

Weeks after the NSS released the summary of its investigation, Armenian Acting Prime Minister Nikol Pashinyan said the Avetisyans had offered to donate their second Golden Palace Hotel, in Tsaghkadzor, to the state. In September 2019, the government formally accepted the gift.

The hotel’s market value at the time was estimated at 7.5 billion Armenian Drams, or $15.8 million. The State Property Management Committee is currently trying to sell it at auction, but its first two attempts had no bidders, even after the government knocked down the starting price.

A few weeks after the family handed over the property, the case against Avetisyan was closed.

Several top Armenian officials, including the prime minister at the time and the head of the investigation, made comments implying that the gift of the hotel was linked to the end of the case.

“My opinion is that if the legislation allows, there is no need to jail people but give them opportunity to restore the harm,” then-NSS director Artur Vanetsyan told local media.

But the Prosecutor General’s Office insists that the case was dropped for legal reasons. In a statement to Hetq, the spokesperson said the office had terminated the money laundering case because it could not be proven, and the statute of limitations had expired on the other allegations.

Later — seemingly contradicting the office’s previous statement about the preliminary investigation — a spokesperson said Avetisyan had only ever been a witness in the case.

The Prosecutor General’s Office and the National Security Service also said they had no information about Avetisyan’s bank accounts in the Isle of Man.

In July 2019, Golden Group Ltd was struck from the Isle of Man’s company register. But to date, it remains the majority owner of Golden Palace Hotel LLC, according to Armenia’s State Register.

Armen Avestisyan’s mother, Knarik Sahakyan, has owned 6.3 percent since 2016 and his son, Artashes Avetisyan, has been general director since June 2018. Three years ago, the family opened their third venture, the Golden Palace Hotel, on Yerevan’s exclusive Northern Avenue.

Armen Avetisyan declined to answer questions, saying in a statement through his lawyers that law enforcement bodies “have carried out a comprehensive and detailed investigation into the issues raised by you, and official announcements have been disseminated.”

“I don’t see any point in providing additional information or comment.”