On 21 January, the Armenian National Assembly passed on the second reading of the amendments for the bill on Banking Secrecy with 73 votes in favour and 39 against, reported aysor.am. First Deputy Minister of Justice Rafik Grigoryan stated earlier that the bill was designed to make the fight against corruption crimes more effective. He claimed that international experience and, in particular, the Scandinavian model was considered while working out the bill. 

Until now, Armenian banks have been required to provide tax and law-enforcement authorities with information about financial accounts of only those clients who are accused or suspected of certain crimes. The bill passed by the parliament in the first reading last month would allow investigators to also see what individuals linked to criminal suspects have in their domestic bank accounts. 

“All countries, at least those aligned in the Council of Europe, are now trying to ensure a more transparent regulation of the banking and financial sector,” said Vladimir Vartanyan, the chairman of the parliament committee on legal affairs. 

Opposition lawmakers criticized the bill, saying that it could scare away investors. “With these changes what message will we be sending to investors if our investment climate is undermined as a result?”, said Mane Tandilian of the opposition Bright Armenia Party.

The Armenian government approved the draft law on Making Amendments and Addenda to the Law on Banking Secrecy on 12 September 2019, which has been the subject of much debate. Deputy Prime Minister Mher Grigoryan expressed his concerns at the meeting that this would contribute to the increase of cash transactions, which entails considerable corruption risks.

The Former Minister of Economic Development and Investments Artsvik Minasyan also criticized the government’s decision on banking secrecy because it does not comply with international best practice. “This will lead to people withdrawing money, switching from non-cash to cash, and what’s worse, especially for a country that is looking for foreign investment, simply closing the door to potential cash inflows,” he said.

The Armenian Prime Minister Nikol Pashinyan defended the bill when it was initiated, stating that without the planned changes in the banking system, the government of Armenia will not be able to build a sovereign, democratic, legal and social state. Pashinyan looked upon the model of Scandinavian countries. “These economies do not collapse, they are considered prosperous and [they have] a stable banking system, while in our country some people have set laws for themselves so that they could steal and then hide the loot, hiding behind these laws. We can't continue to tolerate a similar situation,” he said.

The Union of Armenian Banks called the government initiative a “step backwards” when it was initiated. As the press service of the Central Bank of Armenia told ArmInfo on September 13, that both under the current law and after the proposed changes come into force, data containing bank secrets will be provided only by court order. "The institution of banking secrecy has been and remains one of the pillars of financial stability, and the planned regulation compared to the current one is not considered mitigation. The Central Bank is firm in maintaining the institution of bank secrecy and in ensuring financial stability in the country," it said.