YEREVAN, July 16. /ARKA/. The report of the Committee of Experts of the Council of Europe on the evaluation of measures against money laundering and terrorist financing (MONEYVAL) on Armenia has recorded the country's progress in developing a system to combat money laundering and terrorist financing, but has identified insufficient effectiveness in investigations, prosecutions, and confiscation of criminal assets, as well as the need to strengthen oversight in several sectors of the economy.
The founder of the organization tvyal.com, Agasi Tavadyan, presented his vision of the MONEYVAL conclusions, the associated economic and reputational risks, the impact of transit capital flows on the Armenian economy, and the necessary measures to enhance the transparency of the financial system in an interview with the ARKA agency.
Transit flows supported economic growth
Armenia has gained significant economic benefits from transit capital flows in recent years, but the lack of transparency regarding the origin of some of these funds creates reputational and institutional risks for the country, Tavadyan believes.
According to him, Armenia's unique geographical and economic position simultaneously opens up opportunities for attracting capital and raises the requirements for monitoring financial flows.
Tavadyan reminded that after 2022, Armenia, as a small open economy neighboring Russia and Iran, integrated into the international financial system, became a transit hub for significant volumes of capital.
“These flows enriched the Republic of Armenia and were redirected to third countries such as Switzerland and the UAE, which are legally quite favorable towards capital of unknown origin,” he said.
According to the expert, the growth of Armenia's economy by 12.6% in 2022 was largely due to the influx of Russian capital following the onset of the Russian-Ukrainian conflict.
“Half of that 12.6% came from the financial sector and the IT segment. We certainly benefited from this,” Tavadyan noted.
He also reminded that from mid-2023 to mid-2024, Armenia served as a transit state for Russian gold.
Moreover, according to the expert, starting from September 2025, a significant volume of Iranian capital began to flow into Armenia, which also contributed to maintaining high economic growth rates in 2025.
Enhanced monitoring is not the only investment risk
Speaking about Armenia's inclusion in the enhanced follow-up monitoring mode of MONEYVAL, Tavadyan noted that the country's authorities have traditionally sought to maintain a balance in relations with various states so that Armenia can fulfill its role as a regional transit center.
At the same time, he said, factors unrelated directly to the MONEYVAL report are already affecting the country's investment attractiveness.
One of the problems the expert identified is the insufficient diversification of foreign investments. He stated that capital from certain countries is concentrated mainly in a few sectors, which increases the economy's dependence on political and economic relations with specific states.
“If, for example, problems arise in relations with one of the states, investments in an entire sector may be frozen,” Tavadyan said.
He considers the decline in investor confidence in Armenia's institutional and legal environment to be a more serious factor. He reminded that in the last two years, the Armenian government has concluded a number of deals and made decisions that raise certain legal questions, which reduce the country's investment attractiveness.
As such examples, Tavadyan cited the nationalization process of the Closed Joint Stock Company “Electric Networks of Armenia,” as well as the transfer of state shares in the Zangezur Copper-Molybdenum Combine.
In his opinion, foreign investors pay attention not only to assessments and reports from international organizations but, first of all, to the practice of property protection, the predictability of government decisions, and guarantees of investment safety.
Among other significant factors, he also highlighted the availability of skilled labor and the cost of labor resources.
Transparency of beneficiaries needs to be improved
MONEYVAL recommended that Armenia strengthen oversight of virtual asset service providers and non-public investment funds, improve risk assessment in the real estate sector, and enhance the reliability of information about ultimate beneficial owners.
Tavadyan noted that certain steps have already been taken in Armenia regarding the disclosure of ultimate beneficial owners.
“Over the past two years, the institute of real beneficiaries has been developing. This is good from the perspective of managing capital flows so that the state can see where and for what purpose capital flows are going,” he said.
The expert called the development of this institute a positive step, but emphasized that due to the scale of transit capital flowing through Armenia, many questions remain open.
Legislative changes alone are not enough
To achieve measurable progress by the next MONEYVAL report, Armenia needs not only to improve legislation but also to enhance the transparency and manageability of financial flows, Tavadyan believes.
“The more open, transparent, and controlled financial flows are, the more benefits they can bring to the state,” he said.
According to the expert, Armenia, as a small open economy, a member of the EAEU, a neighbor of Iran, and part of the global financial system, has taken advantage of a significant volume of transit financial resources.
“These funds have enriched us, but the origin of some of the funds coming from warring countries raises many questions,” Tavadyan concluded.
