Azerbaijan Country Summary

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.

Azerbaijan faces significant challenges related to corruption and organized crime, which hinder foreign investment and economic development. Despite government initiatives aimed at reducing corruption, such as the establishment of ASAN service centers and the approval of a National Anti-Corruption Action Plan, issues persist in public procurement, the judiciary, and law enforcement, with reports of state-embedded actors controlling both business and criminal activities.

Azerbaijan's economy is heavily reliant on oil and gas, which constitute about 90% of its export revenue and over half of the state budget, making the investment climate challenging despite government efforts to attract foreign investment and diversify the economy. In 2023, the economy grew by 1.1%, with inflation rising to 8.8%, and the government has set ambitious targets for renewable energy, aiming for 30% of installed electricity capacity to come from renewables by 2030. While the government has implemented reforms to improve the business environment, issues such as corruption, a lack of judicial transparency, and a slow pace of structural reforms continue to hinder the development of a competitive private sector.