Migom, leader, and now contact named in black list of central bank of Azerbaijan

Analysis Materials 25 August 2010 12:05 (UTC +04:00)

This time the Central Bank of Azerbaijan (CBA) instructed the commercial banks operating in the Republic to suspend cooperation with the Contact money transfer system. The reason for the suspension is the same reason in June when Azerbaijani banks suspended operations on money transfers with the systems Migom and Leader, which conducted illegal activities on the Azerbaijani territories occupied by Armenia. Despite repeated warnings, Contact also did not stop operations in the occupied territories.

Contact system implements money transfers to Russia, CIS, Baltic and CIS countries without opening an account. Organizer and clearinghouse is AKB RUSSLAVBANK (JSC).

MIGOM is an international money transfers system for individuals without bank accounts, created in the European Trust Bank.

The Central Bank of Azerbaijan calculates the amount of operations conducted by Azerbaijani banks through the above-mentioned international payment systems till the requirements to terminate cooperation because of violation of country's national interests by these systems. And in each case, the actions of payment systems cause damage to themselves, since because of the termination of cooperation with Azerbaijani banks, they lose a big customer base in Azerbaijan, which can not be covered by operations through one bank in Khankendi.

History of repeats

Similar violations were found in the activities of Contact already in 2008, but then they were removed.
Also, similar requirements had already been made to the Azerbaijani banks with regards to money transfer systems Western Union and MoneyGram. Upon the requirement of the Central Bank, from July 30, 2008, the banks suspended money transfer operations with these systems, which were resumed on August 14 of the same year. The decision to resume cooperation with them was taken based on commitments undertaken by the Western Union and Moneygram that such facts will not be allowed in the future.

At the same time the delegation headed by vice-president of Western Union Jonathan Knaus visited Azerbaijan, and at the meeting at the CBA, announced the termination of business relationships with organizations in the occupied territories of Azerbaijan. The guest informed that at the level of senior management, commitments were announced that payment system would not repeat such actions in the future.

Other payment system Moneygram also fulfilled the requirements made by Azerbaijan, accepting the operating conditions in the country in accordance with the law and international principles. It also officially undertook obligations to terminate transfers in the occupied territories of Azerbaijan.

Violations of the national interests of the country by these systems were identified during the monitoring conducted by the Central Bank in 2008 to ensure financial intermediaries in the country with national legal framework. As a result, it was revealed that several money transfer systems conduct operations in the Azerbaijani territories occupied by Armenia. They included CONTACT, WESTERN UNION, GOLDEN CROWN - MONEY TRANSFERS, MONEYGRAM, MIGOM, PRİVAT MONEY, LEADER.

On the official websites of these systems, Azerbaijan's territories were presented in a distorted form. On the other hand, they collaborated with organizations operating without a license from the CBA. Some measures were taken with regards to the violators: requirements were made to suspend illegal activities. As a result, many payment systems stopped illegal activities. For example, Russia's Vneshtorgbank even closed branch of its subsidiary bank VTB Armenia in Khankendi.

New warnings

The Central Bank of Azerbaijan (CBA) does not intend to cooperate with companies engaged in illegal activities on the Azerbaijan territories occupied by Armenia, the deputy chairman of the CBA Board Aftandil Babayev said.

"We are reacting to the activities of companies engaged in money transfers on the occupied territories, take appropriate actions and even suspend cooperation if they continue their activities on these territories. The money transfer systems take this into account and correct their mistakes," Babayev said. Earlier, to eliminate these facts, the Central Bank made warnings to money transfer systems and supervisory authorities of countries in which they are located, requiring the suspension of money transfers on the occupied territories, and informing that would otherwise be a ban on cooperation with Azerbaijani banks.

Babayev added that international money transfer system Migom and Leader are already trying to correct their mistake.

Cooperation with foreign banks that carried out illegal money transfers in occupied Azerbaijani territories can be restored only after thorough checks when it will be confirmed that they, the banks not only make apology to Azerbaijan, but indeed stopped their illegal operation.

Azerbaijani Khazri money transfer system

The Azerbaijani Kapital Bank and the Russian "Bank of Capital Credit" completed the talks with upgrading of existing JV Khazri and the conclusion of an agreement on the opening of service points around Moscow.

The Russian bank was pleased to emphasize that the system of urgent remittances Khazri differs from other systems for properties such as the fulfillment of the transfer as soon as possible (about 10 minutes), minimum amount of commission (1.5 percent of the amount of translation), coverage of all Azerbaijani regions and simple design of the translation.

In the near future, the sides plan to increase the number of service points in Moscow, as well as increase coverage of the entire territory of Russia. Particular attention will be given to places of compact residence of Azerbaijanis in Russia. A number of advertising campaigns and marketing campaigns will be held to promote a new product on the market and inform the population.

The Khazri money transfer system of Kapital Bank was established in 2007. Today it operates in more than 100 bank branches, allowing transfers of funds to all regions of the republic. The turnover of the system amounted to 50 million manat for three years. The popularity of the system is connected with low rates and easy procedure for the transfer to the client.

 Money transfer through mobile communication

Russian mobile operator Mobile TeleSystems (MTS) announced to subscribers of its network on possibility to transfer money to Azerbaijan.

When transferring money to Azerbaijan the MTS subscribers have the opportunity to put the commission amount on his/her mobile phone account.

The maximum sum of the money transfer is 120 000 rubles. Generally interests for money transfer in Russia makes 1.5%, in CIS countries 2%.

According to MTS retail network Sergey Rumyantsev, the advantage of the program for sending remittances is a short and easy for the customer process of registration of transfers, the lack of unnecessary formalities and requirements to the documents.

The program's partner is "Golden Crown" (Zolotaya Korona) money transfer system.


Instant money transfers without opening an account are very popular. After all, the main advantage of instant transfers is easy registration, high speed of transfer, competitive rates, a wide network of service.

The Azerbaijani side also conducts active work to prevent bank transfers in the occupied territories of Azerbaijan. At an official level, both individuals and legal entities are informed of the illegality of any activity in the occupied territories of Azerbaijan without the consent of official Baku.