Russia’s Anti-Money Laundering Efforts Fall Short, Experts Warn

Weaknesses in Russia’s AML/CFT Regime Highlighted

A recent evaluation has exposed significant weaknesses in Russia’s anti-money laundering (AML) and combating the financing of terrorism (CFT) regime. The report highlights a lack of effective oversight, inadequate supervision, and insufficient transparency, sparking concerns about the country’s ability to effectively prevent financial crimes.

Incomplete Oversight of Illegal Alternative Remittance Systems

• Russian law enforcement bodies have been urged to prioritize investigating these systems to better assess the size and nature of money laundering and terrorist financing threats.
• The report highlights a lack of effective oversight of illegal alternative remittance systems operating in Russia, which poses a significant threat to national security.

Ineffective Implementation of AML/CFT Regime for DNFBPs

• The requirements for lawyers, notaries, and accountants are particularly concerning, with many having implemented reporting measures in a manner that does not align with the law.
• The report criticizes the lack of effective supervision of DNFBPs, including casinos and real estate dealers.

Limited Powers and Resources to Focus on AML/CFT Matters

• The Assay Chamber’s limited powers and resources to focus on AML/CFT matters for dealers in precious metals and stones are a cause for concern.
• This highlights the need for increased investment in AML/CFT efforts.

Failure to Register or Provide Information on Beneficial Ownership

• Russia has failed to register or readily provide information on beneficial ownership and control of legal persons, as required by international standards.
• This lack of transparency makes it difficult to track the source of funds and identify potential money laundering schemes.

Experts Warn of Serious Consequences

• “Russia’s AML/CFT regime is in dire need of improvement,” said a leading expert on anti-money laundering. “The lack of effective oversight, inadequate supervision, and insufficient transparency creates an environment conducive to money laundering and terrorist financing.”
• Experts warn that these weaknesses could have serious consequences for national security and the integrity of the financial system.

Urgent Action Required

• Russia has been urged to take immediate action to strengthen its AML/CFT regime, including:
  • Increasing the effectiveness of its supervisory powers
  • Improving reporting requirements for DNFBPs
  • Enhancing transparency on beneficial ownership and control