Russia’s Financial Institution Customer Due Diligence Under Scrutiny

The Financial Action Task Force (FATF), Eurasian Group, and MONEYVAL have completed a comprehensive review of Russia’s anti-money laundering and counter-terrorist financing (AML/CFT) system. This assessment examines Russia’s measures to address risks emanating from UN-designated terrorists and terrorist organizations.

Areas of Progress

• The establishment of national cooperation and coordination mechanisms, rated “C”
• Implementation of targeted financial sanctions related to terrorism and terrorist financing, rated “PC”

Deficiencies Identified

Customer Due Diligence Requirements

• Russia’s customer due diligence requirements for financial institutions were found to be lacking, rated “LC”

Record-Keeping System

• Russia’s record-keeping system was also deemed inadequate

Financial Institution Secrecy Laws

• Russia’s financial institution secrecy laws were deemed inadequate, rated “C”

Limited Progress in Addressing Risks Associated with New Technologies and Reliance on Third Parties

Despite these shortcomings, the assessment concludes that Russia has taken steps to improve its AML/CFT regime, including:

Establishment of a Financial Intelligence Unit

• Implementation of measures to prevent the misuse of cash couriers

Methodology

The report’s findings are based on an evaluation of 40 FATF Recommendations, which assess various aspects of Russia’s AML/CFT system, including:

• National cooperation and coordination
• Money laundering and terrorist financing offenses
• Customer due diligence
• Record-keeping
• International cooperation