Azerbaijan Country Summary
Sanctions
Medium Concern
FATF AML Deficient List
Low Concern
Terrorism
Medium Concern
Corruption
High Concern
US State ML Assessment
Medium Concern
Criminal Markets (GI Index)
Medium Concern
EU Tax Blacklist
Low Concern
Offshore Finance Center
Low Concern
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 UN Security Council, which are designed to maintain international peace and security without armed force. Since 1966, the Security Council has established 31 sanctions regimes, including economic sanctions and targeted measures like arms embargoes and travel bans, with a focus on the rights of those affected by these sanctions.
As of October 2023, there are 15 ongoing sanctions regimes addressing issues like political conflict resolution and counter-terrorism. The UK has its own arms embargo related to the Nagorno-Karabakh region, which restricts military supplies and is assessed on a case-by-case basis to prevent diversion to armed forces.
Bribery & Corruption
Rating |
0 (bad) - 100 (good) |
|---|---|
| Transparency International Corruption Index | 22 |
| 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 initiatives like the National Action Plan to Strengthen the Fight Against Corruption. While the government has made some progress in enhancing transparency and reducing opportunities for bribery through e-government services, challenges persist, particularly in public procurement and the judiciary. The existing anti-corruption laws are not effectively enforced, leading to a business environment where compliance risks are high, especially in sectors like oil.
Economy
Azerbaijan's economy is heavily reliant on the oil and gas sector, which constitutes approximately 90% of export revenues and over half of the state budget. In 2023, the economy grew by 1.1%, with an annual inflation rate of 8.8%, while the government aims to diversify the economy by targeting non-oil sectors such as agriculture, tourism, and renewable energy.
The investment climate in Azerbaijan is challenging, primarily due to its heavy reliance on the oil and gas sector, which constitutes about 90 percent of export revenue. Although the government has introduced reforms to attract foreign investment and diversify the economy, significant issues such as corruption, slow structural reforms, and a lack of judicial transparency persist. While foreign investments are legally protected, the dominance of government-connected holding companies and limited opportunities in non-oil sectors hinder broader investment growth.
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- Risk Analysis
- Corruption
- Economy
- Sanctions
- Narcotics
- Executive Summaries
- Investment Climates
- FATF Status
- Compliance
- Key Findings
