Financial Crime World

Russian Federation Removed from FATF Listing: Financial Institutions Take Notice of New Risks and Compliance Requirements

The Financial Action Task Force (FATF) has taken a significant step by suspending the Russian Federation’s membership, citing its failure to comply with international anti-money laundering and counter-terrorism financing standards. This decision comes in response to Russia’s ongoing war in Ukraine and perceived threats to global financial stability.

Key Updates from FATF

  • The Russian Federation is no longer subject to FATF’s standards and recommendations.
  • South Africa and Nigeria have been added to the list of jurisdictions under increased monitoring, while Cambodia and Morocco have been removed.
  • Iran and the Democratic People’s Republic of Korea (DPRK) remain on the high-risk jurisdictions list, with sanctions and restrictions in place against them.

Risks and Compliance Challenges for Financial Institutions

For financial institutions operating in or dealing with Russia, this development poses significant risks and compliance challenges. According to FATF, it is essential for global banks to reassess their relationships with Russian counterparts.

  • Review existing customer relationships
  • Assess the risks associated with ongoing business dealings
  • Implement necessary measures to prevent money laundering and terrorist financing

Guidance from FinCEN

FinCEN advises US financial institutions to exercise enhanced due diligence when dealing with Russian entities or engaging in transactions with them. This includes:

  • Reviewing existing customer relationships
  • Assessing the risks associated with ongoing business dealings
  • Implementing necessary measures to prevent money laundering and terrorist financing

Financial institutions must also comply with UN Security Council Resolutions (UNSCRs) and US sanctions programs, including those administered by OFAC. Failure to do so can result in severe penalties, including fines and criminal prosecution.

Staying Informed and Compliant

As the situation continues to evolve, FinCEN will provide updates on any new developments or guidance relevant to financial institutions operating in this complex environment. In the meantime, we urge all institutions to:

  • Remain vigilant
  • Exercise due diligence
  • Prioritize compliance with international standards and US regulations

For more information on FATF’s decision, please refer to their official website. For questions or comments regarding this release, please contact FinCEN’s Regulatory Support Section at frc@fincen.gov.