Azerbaijan Country Summary
Sanctions
Limited - OSCE - Weapons
FATF AML Deficient List
No
Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center
Please note that although the below Summary will give a general outline of the AML risks associated with the jurisdiction, if you are a Regulated entity then you may need to demonstrate that your Jurisdictional AML risk assessment has included a full assessment of the risk elements that have been identified as underpinning overall Country AML risk. To satisfy these requirements, we would recommend that you use our Subscription area.
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Anti Money Laundering
FATF Status
Azerbaijan is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Azerbaijan was undertaken in 2023. According to that Evaluation, Azerbaijan was deemed Compliant for 7 and Largely Compliant for 22 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 2 of the Effectiveness ratings.
Sanctions
Azerbaijan, as a UN member, must adhere to sanctions imposed by the United Nations to maintain international peace and security. The UN Security Council has established 31 sanctions regimes since 1966, which include various measures such as economic sanctions and arms embargoes, with a focus on protecting the rights of those targeted. Currently, there are 15 ongoing sanctions regimes aimed at political settlements, nuclear non-proliferation, and counter-terrorism, managed by a sanctions committee.
In February 1992, the OSCE requested an arms embargo on the Nagorno-Karabakh area, which remains in effect. The UK has refined its arms embargo to include all military goods that could be used in this region, assessing export applications on a case-by-case basis. The embargo aims to prevent military supplies from reaching armed forces unless there is no risk of diversion.
Bribery & Corruption
| Rating | 0 (bad) - 100 (good) |
|---|---|
| Transparency International Corruption Index | 23 |
| World Bank: Control of Corruption Percentile Rank | 12 |
Corruption remains a significant barrier to foreign investment in Azerbaijan, despite government efforts to combat it through various initiatives, including the establishment of ASAN service centers aimed at reducing opportunities for bribery. While Azerbaijan has made some progress with its anti-corruption legal framework and has implemented a National Action Plan to strengthen its fight against corruption, issues persist in public procurement, the judiciary, and tax administration. The effectiveness of these measures is hindered by inconsistent enforcement and a culture of impunity among government officials.
Economy
Azerbaijan's economy is heavily reliant on oil and gas, which contribute approximately 90% of export revenues and over half of the state budget. In 2023, the economy grew by 1.1%, while inflation rose to 8.8% year-on-year, with forecasts predicting a decrease to 5.3% in 2024. The government is actively pursuing economic diversification by targeting non-oil sectors such as agriculture, tourism, and renewable energy.
The investment climate in Azerbaijan is characterized by challenges, despite government efforts to attract foreign investment and diversify the economy beyond its heavy reliance on oil and gas, which constitutes about 90% of export revenue. While foreign investments are legally protected and the government has targeted non-oil sectors such as agriculture, tourism, and renewable energy for growth, issues like corruption, slow structural reforms, and a lack of transparency continue to hinder the investment environment.
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- Risk Analysis
- Corruption
- Economy
- Sanctions
- Narcotics
- Executive Summaries
- Investment Climates
- FATF Status
- Compliance
- Key Findings
