Armenia’s central bank to get early-intervention powers, fines of up to 1% of assets. Draft law

The Central Bank of Armenia will be able to intervene in the operations of banks and other financial institutions when risks emerge, not only after a violation.

This is set out in a draft law, prepared by the Central Bank of Armenia, amending the Law on the Central Bank of the Republic of Armenia. The draft fully rewrites Chapter 5.1 of the law, which covers supervision and enforcement measures.

Risk-based supervision

The draft establishes forward-looking, risk-based supervision. The central bank will continuously assess supervised entities’ risks, their capacity to manage those risks and their ability to absorb potential losses, and will focus on the riskiest institutions and segments.

Intervention tools will apply where material risks are identified, requirements are breached or a breach is realistically likely within a year, or where an institution’s financial position, liquidity or normal operation is threatened. At the first stage, the central bank may use a supervisory letter to require a capital plan, a cost-cutting plan or a plan to reduce non-performing assets, an internal audit, or an extraordinary board meeting.

In more serious cases, the central bank will be able to suspend managers’ powers, restrict operations, pay rises and bonuses, require changes to the business model, ban tariffs that breach customers’ rights, and strip a significant shareholder of dividends. These decisions can be appealed in court, but an appeal will not suspend their enforcement.

Fines and agreements with the central bank

The fine on a supervised entity for each violation may not exceed 1% of its assets or 10% of its revenue, whichever is higher. If the profit gained from the violation is larger, the fine may reach twice that profit. Managers may be fined up to 10,000 times the minimum wage, payable from their personal funds.

A fine will be reduced if the institution complies with the central bank’s instruction on time, and payment may be spread over up to one year. The central bank will publish brief information on enforcement measures, without customers’ personal data. Under the draft, administrative proceedings may last no longer than one year.

Under the draft, the central bank and a supervised entity or financial group that committed a violation may sign an agreement to improve its financial position. The agreement may suspend dividends, cut managers’ pay, set stricter prudential ratios and limit advertising. Once it is signed, proceedings may be suspended and fines deferred or reduced. Failure to comply with the agreement may be grounds for revoking the licence.

Monetary policy and accountability

The central bank will publish a monetary policy report at least once a quarter, with scenarios for inflation and macroeconomic forecasts.

By May 1 each year, the central bank will submit an annual report on its activities to the National Assembly. It will include the monetary policy report, the report on its implementation and the financial stability report. The central bank will also publish a document on supervisory priorities at least once a year.

Under the draft, safety and liquidity are the primary criteria for investing international reserves. The central bank will publish their level and composition every quarter and, if a dangerous downward trend emerges, will report to the government, the prime minister and the speaker of parliament on an extraordinary basis.

Other changes

• The governor, deputy governors, board members and other staff designated by the board will be barred for one year after leaving from working for institutions the central bank regulates or supervises.
• The central bank will be able to request any information from supervised entities, including information protected as secret, and they will not be able to refuse.
• For balance of payments, international investment position and external debt statistics, the central bank will receive individual data from government bodies, companies and sole proprietors, to be used for statistical purposes only.
• The central bank board will adopt regulations on personal data protection in the financial system.
• The central bank may open other offices, and the locations of its head office and other offices will be set by its charter.

The draft law is open for public consultation until October 14, 2026. It must be approved by the Government of Armenia and then submitted to the National Assembly. The law will enter into force six months after official publication. Provisions on supervisory assessment and intervention tools will apply to each type of financial institution once the central bank’s relevant decisions take effect.