Title: FATF Plenary Session: Will Russia Face Global Sanctions Amid Escalating Tensions with Ukraine?

By Anna Kuznetsova, Moscow Bureau Chief

Background

The Financial Action Task Force (FATF), an international organization combating money laundering, terrorist financing, and proliferation financing, is due to convene for a plenary session in Paris from June 21-23, 2023. The session comes at a time of heightened tensions between Russia and Ukraine. Ukraine has reportedly urged the FATF to include Russia on its list of high-risk jurisdictions.

Russian Risks and Suspension from FATF

Amid the ongoing military conflict between Russia and Ukraine, the FATF is set to address significant risks emanating from Russia. Suspended from FATF membership in February 2023 due to concerns over reports of Russia’s arms trade with UN-sanctioned jurisdictions and malicious cyber activities, the organization must now respond technically.

1. FATF’s Response FATF procedures dictate that a jurisdiction’s threats, vulnerabilities, or specific risks in the AML/CFT/CPF arenas should provide the basis for review and inclusion on its infamous “blacklist.”

Ukraine’s Perspective

Ukraine, a vocal critic of Russia, argues that Russia’s behavior has not improved since its suspension and may worsen. Despite this, Russia continues to challenge international efforts against money laundering, terrorism financing, and proliferation financing, threatening global financial security.

Multifaceted Risks

Russia’s risks to the global financial system extend beyond its issues with Ukraine. It has been linked to:

• Financing terror organizations in Africa
• Corruption in Western institutions
• Cryptocurrency use for money laundering and illicit activities

A recent alleged Russian destruction of the Nova Kakhovka dam in southern Ukraine, causing one of Europe’s largest man-made disasters, highlights the potential consequences of the FATF’s decisions.

Historical Context

Russia was first placed on FATF’s blacklist in 2000, a time when its challenges to the global financial system were less severe. The FATF’s expertise in navigating intricate international issues positions it well to address these growing risks and protect the global financial system.

A Turning Point

With Russia’s continually increasing risks, the FATF plenary session in Paris could mark a critical turning point in the fight against financial instability. Consequences for global financial security and the ability of malign actors to manipulate and undermine the system will depend on the decisions made during the session.

Stay Informed

Stay updated on developments from the FATF plenary session.