Friday, 22 November

Selective Disclosure: Armenia’s Central Bank Conceals Data on Offshore Transfers

Armenia’s Central Bank (CB) claims thatsome data regarding money flows to and from offshore financial centers is protected from public disclosure under the law.

We say ‘some’, because the CB is being selective when it comes to which information can be disclosed and what cannot.

When Hetq contacted the CB, requesting that it provide figures of cash inflows and outflows to and from the British Virgin Islands, Cyprus, Lichtenstein, Luxembourg, Panama, the Cayman Islands, the Seychelles and other offshore centers since 2007, it only did so for ‘natural persons’.

And even in this case, the CB confessed that it had no data for certain countries (see asterisk) prior to 2012.

Based on this incomplete data, the largest inflows to Armenia came from Cyprus and Switzerland - each registering more than US$370 million. The largest outflows from Armenia also went to the same two countries - $77 million and $143 million respectively.

Inflows to Armenia –  Outflows from Armenia 
Natural Persons (USD millions)

When Hetq again requested that the CB provide data regarding cash flows made by ‘legal entities’, it refused to do so citing Article 12 of the RA Law on Combatting Money Laundering and Terrorism Financing, claiming that any such information is protected. 

The Authorized Body shall be prohibited to publicize or otherwise provide any information (except for the information provided to criminal investigation or other authorities in the manner established by law) disclosing or facilitating disclosure of any person having reported on a suspicious transaction (business relationship) and (or) having participated in its reporting to the Authorized Body or in sending a statement to criminal investigation authorities by the Authorized Body. 

According to data from Armenia’s National Statistical Service, legal entities based in Cyprus, the British Virgin Islands and Luxembourg are investing the most money in Armenia. 

Overseas Investment in Armenia (AMD thousands)

We must point out that Article 8 of Armenia’s Law on the Freedom of Information specifies the following limitations regarding the disclosure of information: "...contains state, official, bank or trade secret; infringes the privacy of a person and his family, including the privacy of correspondence, telephone conversations, post, telegraph and other transmissions; contains pre-investigation data not subject to publicity; discloses data that require accessibility limitation, conditioned by professional activity (medical, notary, attorney secrets);  infringes copy right and associated rights."

There is nothing in the law prohibiting the public disclosure of information regarding financial inflows and outflows. What, then, is the Central Bank hiding?

Moreover, why does the Central Bank see fit to provide data regarding ‘natural persons’ but balks when it comes to legal entities?

This is nothing less than selective public disclosure and merely leads us to believe that the Central Bank may indeed have something to hide.

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