CBA denies Reuters report on Armenian banks expanding cooperation with Iran

August 21, 2012 - 18:33 AMT

PanARMENIAN.Net - The banks in the Republic of Armenia, operating under the supervision of the Central Bank of Armenia (CBA), are subject to RA laws, CBA regulations and internal rules. One of CBA’s supervisory tiers is the provision of the adequate implementation of financial sanctions imposed on certain countries under relevant decisions of international organizations, such as the UN Security Council Resolutions.

The decisions and relevant financial sanctions, imposed by the European Union and the United States of America in relation to nuclear proliferation programs of certain countries, are also in focus of CBA, in order to avoid any possible involvement in or assistance to such programs by any bank in Armenia. The CBA obligates all banks and financial institutions in the Republic of Armenia to scrutinize their transactions to avoid any possible involvement in transactions considered unacceptable by the international community. Moreover, pursuant to the policy adopted by the bank’s board, individuals and companies from higher-risk countries are neither allowed to establish a financial institution in the Republic of Armenia nor to acquire any participation in the equity of acting financial institutions.

“Mellat Bank” CJSC has been operating in the Republic of Armenia since 1996; its clientele is primarily composed of small and medium enterprises involved in the foreign trade between the Islamic Republic of Iran and the Republic of Armenia, as well as of tourists and students. The bank’s activities and assets have dramatically decreased during the past 3-4 years; in the period from December 31, 2010 to July 1, 2012, the banks’ assets have decreased by more than 50%, dropping from USD 88 million to only USD 40 million. “Mellat Bank” CJSC holds no correspondent accounts either in the EU and the U.S. or in Armenia.

The banks in the Republic of Armenia, including “ACBA-Credit Agricole Bank” CJSC, hold no correspondent accounts with banks and financial institutions in the Islamic Republic of Iran. The banks in the Republic of Armenia are strictly bound to customer due diligence rules, in order to avoid any direct or indirect financing of individuals and companies related to nuclear proliferation programs.

CBA will follow its supervision over the behavior and transactions of all financial institutions and their customers in Armenia, in order to safeguard its financial system from any destabilizing effects, the bank’s press service reported.

According to Reuters report, with international sanctions squeezing Iran, the Islamic Republic is seeking to expand its banking foothold in Armenia to make up for difficulties in countries it used to rely on to do business.

Iran's growing interest in its neighbor Armenia comes at a time of rising international isolation for Tehran and increasing scrutiny by Western governments and intelligence agencies of Iranian banking ties worldwide as they attempt to stifle the country's nuclear program.