Financial Crime World

FATF Report: Russia’s Progress in Money Laundering Fight, but More Needs to be Done

Russia’s AML/CFT System Evaluated by FATF, Eurasian Group, and MONEYVAL

Paris, December 17, 2019

Following assessments by the Financial Action Task Force (FATF), the Eurasian Group, and MONEYVAL, the Russian Federation’s (Russia) anti-money laundering and counter-terrorist financing (AML/CFT) system was evaluated.

Acknowledging Money Laundering Risks and Taking Action

Russia recognizes its significant money laundering and terrorist financing (ML/TF) risks and has adopted policies and laws to mitigate these risks. The country’s efforts include:

  • Identifying and addressing ML/TF risks, including those related to corruption and narcotics trafficking, via a comprehensive national risk assessment
  • Establishing policies to combat ML/TF, supported by strong domestic coordination and cooperation

Strengthening Asset Freezing Capabilities

While impressive progress has been made, certain gaps remain in Russia’s capabilities to promptly freeze assets linked to terrorism financing, proliferation of weapons of mass destruction, and related crimes. Russia should:

  • Extend its freezing obligations to all natural and legal persons

International Collaboration and Effective Utilization of Financial Intelligence

Russia actively collaborates with international partners through over 100 international cooperation agreements with its financial intelligence unit, Rosfinmonitoring. The country has effectively utilized financial intelligence to investigate and prosecute ML/TF cases, recovering approximately €816 million per year for crime victims.

Prioritizing Complex Money Laundering Cases

Russia should prioritize the investigation and prosecution of complex ML cases, particularly those involving funds being laundered abroad.

Addressing Deficiencies in the Banking Sector

The Russian banking sector has seen increased oversight, significantly reducing the risks of criminal entities holding financial institutions. However, some license deficiencies persist, and the sanctions for banks failing to comply with AML/CFT requirements lack effectiveness or deterrence.

Improving Understanding of ML/TF Risks in the Mining Sector

Russia’s financial and non-financial sectors, including accountants and auditors, have a sufficient understanding of their roles in ML/TF. However, given the country’s significance as a major center for mining precious metals and stones, the risk perception in this sector falls short of the country’s overall risk assessment.

Key Takeaways

  • The Russian Federation acknowledges its ML/TF risks and has adopted policies and laws to mitigate these risks
  • Certain gaps remain in Russia’s capabilities to promptly freeze assets linked to ML/TF, and the country should extend its freezing obligations to all natural and legal persons
  • Russia actively collaborates with international partners and has effectively utilized financial intelligence to investigate and prosecute ML/TF cases
  • Russia should prioritize the investigation and prosecution of complex ML cases, particularly those involving funds being laundered abroad
  • The Russian banking sector has seen increased oversight, but some deficiencies remain, and the sanctions for banks failing to comply with AML/CFT requirements lack effectiveness or deterrence
  • The mining sector, a major center for mining precious metals and stones, has a low risk perception despite the country’s overall ML/TF assessment.