The Misuse of Article 193-1: How Money Laundering Laws Are Applied Against Journalists and NGOs?

Analysis

Lately, the application of Article 193-1 of the Criminal Code (hereinafter referred to as the CC) regarding the legalization of property obtained through crime in Azerbaijan has gained attention. In particular, the widespread use of this article in criminal prosecutions against independent media and non-governmental organizations further surges the legal relevance of the issue. Criminal cases against “Abzas Media”, “Toplum TV”, “Meydan TV” and a number of NGOs necessitate a legal analysis of the article.

Article 193-1 of the CC defines the legalization of property obtained through offense as a crime. According to the article, it is considered a crime if a person conducts operations with the aim of concealing the source, location, nature, ownership and other details of property which is obtained through crime, or is introduced into legal circulation. The objective of the norm is to prevent the introduction of property obtained through crime into lawful economic circulation. In other words, it is necessary to prevent situations that may appear ‘clean’ from a legal standpoint but in reality enable the legalization of money and property obtained through criminal activity. Such cases are more commonly known in society as “money laundering” and are considered, along with corruption, the key manifestation of organized crime in the economic sphere currently. The article is also aimed at preventing the “laundering” of funds obtained from crimes such as corruption, drug trafficking, terrorism, human trafficking and arms smuggling and their introduction into the official economy, in accordance with international law.

The main legal condition for this article is the proof of the property was acquired through a specific criminal offense. This is expressed in the concept of a “predicate crime”. To reiterate, the prerequisite for criminal liability under Article 193-1 is the existence of the acquisition of property as a result of a prior independent criminal act. The norm covers only property acquired through a criminal act; property acquired through any illegal, but not criminal means is not included in the subject matter of this article. Hence, any application of Article 193-1 must be based on significant evidence and must be confirmed not only by assumptions and suspicions, but by specific and substantiated facts. If such a preliminary fact does not exist or has not been proven, the application of Article 193-1 raises crucial legal questions.

This principle is also stipulated in international law. According to Article 9 of the Council of Europe Warsaw Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism of 16 May 2005, the key condition for the offence of money laundering is the acquisition of property through criminal means, and the property to be legalised must have been obtained as a result of a predicate offence previously committed. Simultaneously, according to the Convention, a prior or concurrent conviction for a predicate offence is not a prerequisite for legalisation; the crucial issue is the confirmation by substantial evidence that the property was obtained through criminal means in general. The Convention requires member states to provide for this requirement in their national legislation and confirms the concept of a predicate offence as an international standard.

The issue of how and where Article 193-1 can be applied is also clarified in the Decision of the Plenum of the Supreme Court dated February 23, 2023. The Decision states that in order to determine the composition of this crime, it is necessary to prove the existence of a predicate crime and the property obtained as a result. Else, the application of Article 193-1 is considered legally unfounded. In other words, if the predicate crime is not proved, the charge of legalization cannot be brought. The predicate crime must usually be committed prior to the legalization actions. If the property was obtained as a result of an administrative offense or other offense, then this act is not considered a predicate offense. According to the Decision, if a person is charged only under Article 193-1 of the Code of Criminal Procedure, the court must establish, in accordance with the standard of proof beyond reasonable doubt, that this property was not obtained by means other than a crime. This is possible only through evidence collected, verified and evaluated in accordance with the evidentiary requirements of the Criminal Procedure Code (hereinafter referred to as the CCP). Additionally, data constituting personal, family and commercial secrets, including information on financial transactions, the status of bank accounts and tax payments, can only be seized by court order. In accordance with Articles 177.3.6 and 177.4 of the CCP, such investigative actions can only be carried out lawfully on the basis of a prior court order. It is indicated that in legalization charges, investigative bodies must strictly adhere to the legal framework.

In the above-mentioned notorious criminal cases, investigative authorities have been charging grant or donor funding as money laundering by presenting them as “criminally acquired property.” A common feature of these cases is that, although money laundering charges are raised, it is not explicitly stated which specific predicate (main) crime the alleged property was acquired as a result of, and this connection is not supported by evidence. In addition, there are important questions about how the evidence presented was obtained and whether it complies with the requirements of the CCP. Even though the articles of the CC on illegal entrepreneurship, smuggling, tax evasion are referred to, the specific facts on which these articles are based and how these actions form the predicate of the crime are not sufficiently substantiated in the decisions. Nevertheless, the prerequisite for criminal liability under Article 193-1 is the existence of a specific predicate crime and the evidence of the property obtained as a result of this crime.

At large, the charges brought under Article 193-1 in the aforementioned criminal cases are based on the receipt of financial assistance (grants) from donors and the assessment of these funds as “criminally acquired property”, consequently, acts such as smuggling, tax evasion and illegal entrepreneurship are indicated as predicate offenses. However, when looking at the cases indicated as predicate crimes, it becomes clear that there are serious inconsistencies in their application.

Grant funds are gratuitous funding from a donor. This stems from the Law “On Grant”.

Legislation of the Republic of Azerbaijan puts forward that, registration of grant agreements is mandatory. Foreign donors must obtain prior permission from the Cabinet of Ministers to provide grants, and recipients must register concluded agreements and decisions with the Ministry of Justice.

This administrative procedure serves to ensure transparency and accountability. The legislation also indicates that the grantee does not bear any responsibility for any circumstances other than the state registration of the grant agreement. This is determined by Article 432.1 of the Code of Administrative Offenses.

Failure to register a grant agreement received from donors is an administrative offense, and according to the Plenum Decision of the Supreme Court of the Republic of Azerbaijan dated February 23, 2023, administrative offenses are not considered to be a predicate crime. In such a case, bringing charges under Article 193-1 on the basis of failure to register a grant agreement is a legally ungrounded approach.

Regulations approved over the last 10 years regarding the procedure for receiving grants have made it impossible for independent NGOs to operate.

The report of the international human rights organization, “Human Rights Watch” dated October 8, 2024 emphasizes that the Ministry of Justice of the Republic of Azerbaijan selectively applies legislative provisions or does not take them into account at all. This practice prevents the registration of a number of non-governmental organizations, restricts their access to financial resources and the possibility of legal operation. Such an approach ultimately de facto criminalizes the activities of unregistered NGOs. Most of those indicted in the current wave of arrests are people working for independent initiative platforms and media outlets. As their leaders have seen their registration options infeasible, they have been forced to operate without registration in order to continue their activities. Nonetheless, this activity poses serious risks to their personal safety and legal status. Seemingly, some NGOs and media outlets have been forced to cease their activities altogether.

The European Court of Human Rights (hereinafter referred to as the ECtHR) has also clearly emphasized in its precedents on the registration of NGOs that freedom of association cannot be conditioned solely by state registration and that unjustified restrictions on this right constitute a violation of Article 11 of the European Convention on Human Rights. The Court found the charges of “illegal entrepreneurship”, “tax evasion” and other criminal charges brought against NGO leaders in similar cases such as Aliyev v. Azerbaijan (Nos. 68762/14 and 71200/14), Mammadli v. Azerbaijan (No. 47145/14) and Jafarov v. Azerbaijan (No. 69981/14) to be unfounded. ECtHR noted that the failure to register grants with the Ministry of Justice does not amend their legal status and does not make the NGO’s activities commercial in nature. Emphasizing that the purpose of these prosecutions was to silence and punish, the Court also found a violation of Article 18 of the Convention. These cases related to criminal prosecutions against independent NGOs in 2014, and the individuals arrested in the framework of those cases – Intigam Aliyev, Rasul Jafarov and Anar Mammadli – were vocal representatives of Azerbaijani civil society. Anar Mammadli, who was arrested in 2014 in connection with the NGO case, was detained again in 2024 as a prolongation of the criminal prosecutions against NGOs, despite the decision of the ECtHR that considered his arrest illegal.

Thus, the grant funds received from donors cannot be considered “criminally acquired property” and do not fall within the scope of the crime of smuggling. In accordance with CC, smuggling constitutes a crime only in cases of goods and other objects being concealed from customs control, not properly declared, or illegally transported across the customs border. Accordingly, the charge of smuggling (Article 206) can only be considered a predicate offense if a specific criminal act is proven. This is possible in two cases: the donor obtained the funds illegally, and the donor himself obtained the funds illegally and committed smuggling acts when bringing them into the country (for instance, through customs evasion, concealment, or improper declaration), or the recipient formed this amount through tax evasion or by other offense. Yet, although each of the media cases mentioned alleges that employees smuggled grant funds received from foreign donors into the country in parts, no credible evidence has been presented to confirm that these funds were hidden from customs control, not properly declared, or illegally crossed the customs border. This, in turn, severely questions the legitimacy and competence of the evidence on which the accusation is based.

Tax evasion is not applicable with regard to grant funds, since according to Article 106.1.2 of the Tax Code, gratuitous transfers, membership fees and donations received by non-profit organizations are exempt from taxation. Likewise, the import of goods, the provision of goods to recipients, the performance of work and the provision of services based on grants received from abroad are exempt from VAT (Tax Code, Article 165.1.2). If these conditions are not proven, presenting grants as property of criminal origin, considering smuggling and tax evasion as predicate crimes under Article 193-1 of the Criminal Code is legally ungrounded.

The accusation of illegal entrepreneurship (CC, Article 192) raised in the indictment is also not substantiated in essence. Since grant projects implemented by NGOs and media organizations cannot be interpreted as entrepreneurial activity. For the existence of entrepreneurial activity, it is vital to prove certain conditions - the intention to generate income, regular sale of goods and services, establishment of customer relations and the like. According to the Law “On Entrepreneurial Activity”, entrepreneurial activity is an activity carried out independently by an individual, the main purpose of which is maximization of profit (income by individual entrepreneurs) from the use of property, production and (or) sale of goods, performance of work or provision of services. A similar definition is present in Article 13.2.37 of the Tax Code.

According to Article 192 of the CC, on which the accusation is based, engaging in entrepreneurial activity without state (tax) registration in accordance with the procedure established by the legislation of the Republic of Azerbaijan or without obtaining such permission (license) if such permission (license) is required, as well as using items whose public circulation is restricted in violation of the licensing conditions or without special permission, is considered illegal entrepreneurship when it causes significant damage to individuals or legal entities or the state, as well as if it is committed with significant income. Conversely, the implementation of journalistic and non-profit activities cannot be considered entrepreneurial activity in any case.

In the absence of these elements, it is impractical for it to constitute a basis for the application of Article 193-1.

In domestic judicial practice, especially in cases considered by the Baku Grave Crimes Court, the application of Article 193-1 of the Criminal Code and the concept of a predicate crime appears to be problematic. An analysis of the court’s judgments covering the years 2019–2025 corruption and other crimes against the interests of service, as well as illicit trafficking in drugs and psychotropic substances. In practice, fraud, service forgery, tax evasion, embezzlement, smuggling and drug smuggling are more commonly recognized as predicate crimes of Article 193-1. The activities of the accused are mainly associated with the operations of limited liability companies, commercial activities or abuse of official authority. In such cases, the fact of legalization is usually considered proven on the basis of contracts and financial documents. However, in cases related to smuggling, the issue of proof is ambiguous. Among the analyzed judgments, the confirmation of smuggling as a predicate crime is not substantiated by reliable evidence. No real evidence is provided regarding customs evasion or physical transfer of funds. Even in the one judgment adopted in 2025, in which smuggling was indicated as one of the main crimes, the State Customs Committee noted in its response letter that no transfer of money or valuables was recorded. In two cases of 2025, the court adopted decisions on acquittal under Article 193-1. The reasoning for the verdict stated that there was no evidence under Article 193-1, and that the property was not concealed as legitimate income, but rather was cashed out and divided among individuals. Hence, no substantial evidence of a predicate crime was established. However, in cases involving the activities of independent journalists, the court utilized a varying option. The failure to register or bring into the country grants from foreign donor organizations was often assessed as “illegal entrepreneurship” and “smuggling.” Still, the evidence presented neither establishes the physical transfer of funds across the border, nor does it provide any real facts about entrepreneurial activity. It reveals that the court has taken a different position in cases of the same nature, resulting in a contradictory and discriminatory approach.

According to Article 9 of the Warsaw Convention, although in certain cases proof of the specific crime from which the property was obtained is not required, it must be proven by substantial evidence that it was obtained through a criminal act in general. Yet, in the investigative and judicial practice in Azerbaijan, this evidence is not provided. This contradicts the principles of the presumption of innocence, fair trial and legal certainty.

Resultantly, the judicial practice observed in Azerbaijan on the application of Article 193-1 of the CC is unlawful in terms of the predicate crime being brought forward without legal and factual basis, and the evidence going beyond internationally recognized standards. This leads to both a violation of the principle of a law-governed state and a systematic restriction of the opportunities for the activities of civil society and independent media.