Financial Institution Risk Assessment in Russian Federation Under Scrutiny
The Financial Action Task Force (FATF), the Eurasian Group, and MONEYVAL have conducted a comprehensive review of Russia’s anti-money laundering and counter-terrorist financing system. This assessment aims to evaluate the effectiveness of Russia’s measures against money laundering and terrorist financing, as well as its compliance with FATF recommendations.
Evaluating Risk-Based Approach
The report assesses Russia’s risk-based approach to tackling financial crimes, including its efforts to address risks emanating from UN and domestically designated terrorists and terrorist organizations. However, it does not address the justification behind the domestic designation of an entity as a terrorist or terrorist group.
Key Findings
- Limited Data and Information Sharing: Russia’s ability to assess risk and apply a risk-based approach is considered “low” due to limited data and information sharing.
- National Cooperation and Coordination: National cooperation and coordination between law enforcement agencies and financial institutions are considered “substantial”.
- Progress in Criminalizing Money Laundering and Terrorist Financing Offenses: Russia has made significant progress in criminalizing money laundering and terrorist financing offenses, but confiscation and provisional measures still require improvement.
Recommendations for Improvement
The report highlights several areas that need to be improved:
- Review of Financial Institution Secrecy Laws: Russia’s financial institution secrecy laws need to be reviewed.
- Strengthening Customer Due Diligence Practices: Customer due diligence practices need to be strengthened.
- Reliance on Third Parties for Regulatory Oversight: The country’s reliance on third parties for regulatory oversight is considered a high-risk area.
To address these shortcomings, Russia has committed to implementing several recommendations:
Enhancing Effectiveness
- Improving Data Sharing and Cooperation with International Partners: Russia will improve data sharing and cooperation with international partners.
- Enhancing Risk-Based Approach: Russia will enhance its risk-based approach to tackling financial crimes.
- Strengthening Financial Institution Regulation and Supervision: Russia will strengthen its financial institution regulation and supervision.
The assessment provides valuable insights into Russia’s efforts to combat money laundering and terrorist financing, and highlights areas where improvement is needed. The country’s commitment to implementing FATF recommendations demonstrates its willingness to enhance the effectiveness of its anti-money laundering and counter-terrorist financing system.