Financial Crime World

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Russia’s Anti-Money Laundering and Counter-Terrorist Financing Efforts Show Progress, but Areas for Improvement Remain

A recent assessment by a global financial watchdog has found that Russia has made significant progress in combating money laundering (ML) and terrorist financing (TF), but there are still areas where improvement is needed.

Progress Made

The assessment highlighted the importance of Russia’s Financial Intelligence Unit (FIU), Rosfinmonitoring, which plays a crucial role in identifying ML and TF threats and generating relevant intelligence output. The unit has access to vast amounts of data, including over 20 million Suspicious Transaction Reports (STRs) and 10 million Currency Transaction Reports (CTRs) per year.

The assessment also praised Russia’s national AML/TF policies, which are guided by a consistent policy development process that builds on formal risk assessments and other articulations of risks. Domestic coordination and cooperation between law enforcement agencies (LEAs) is another major strength of the Russian AML/CFT system.

Areas for Improvement

However, the assessment identified several areas where improvement is needed:

  • While ML investigations are generally well-identified through financial investigations, there may be a lack of pursuit of ML outside of predicate offenses.
  • Self-laundering is frequently investigated, but third-party ML is detected and investigated to a lesser extent.
  • Russia’s risk profile suggests that approximately 85% of ML offenses detected relate to high-risk areas such as drug crimes and crimes with public funds. However, the number of ML cases pursued in relation to bribery is not entirely aligned with risk.

Sanctions and Confiscation

The assessment found that sanctions applied against natural persons for ML are partly effective, proportionate, and dissuasive. However:

  • Administrative sanctions against legal persons were not demonstrated.
  • The use of alternative measures to prosecute financial crimes could be improved.
  • Confiscation regarding falsely or non-declared movements of currency and bearer negotiable instruments is pursued to a lesser extent due to the lack of a declaration obligation within the Eurasian Economic Union (EAEU).

Virtual Assets and Future Directions

The assessment recognized Russia’s growing awareness of the threat posed by the misuse of virtual assets (VA), especially in relation to drug trafficking and internet-enabled crime. However:

  • There are still areas where improvement is needed, including the tracing of bulk cash smuggling and the confiscation of proceeds from illegal activities.

Conclusion

Overall, while Russia has made significant progress in combating ML and TF, there are still areas where improvement is needed to ensure that the country remains compliant with global AML/CFT standards.