Russia’s Money Laundering Battle: FATF Report Reveals Areas for Improvement

The Russian Federation has made significant strides in addressing money laundering (ML) and terrorist financing (TF) risks but still requires improvement according to a recent report by the Financial Action Task Force (FATF), the Eurasian Group, and MONEYVAL. This assessment evaluates Russia’s anti-money laundering and counter-terrorist financing (AML/CFT) system against the FATF Recommendations.

Key Findings of the Report

Russia acknowledges the risk of ML, particularly from domestic crimes like corruption and narcotics trafficking.
Improvements are necessary in several areas, including asset freezing, extending AML/CFT obligations, and actions against weapons of mass destruction proliferation.
International cooperation is a priority for Russia, with over 100 international agreements.
Russia effectively uses financial intelligence despite the need to focus more on complex cases.

Identifying and Addressing ML and TF Risks

Russia recognized ML risks and conducted a national risk assessment. This assessment, combined with law enforcement knowledge, has enabled the country to identify and understand these risks.

Necessary Improvements

Asset Freezing: Improvements are needed to address asset freezing issues, extend these obligations to all natural and legal persons, and strengthen actions against proliferation of weapons of mass destruction.
Cooperation with international partners: While cooperation exists, more focus is required on complex money laundering cases, especially those involving funds flowing abroad.
Banking sector: Though banking sector oversight has improved, licensing deficiencies and ineffective sanctions for non-compliance remain.

Enhancements Needed in Other Sectors

The financial and non-financial sectors, such as accountants, auditors, and the precious metals and stones industries, need to enhance their understanding of ML and TF risks.

Progress Since Last Assessment

Since the last assessment in 2008, Russia has made progress in understanding its ML and TF risks and developing a robust legal framework.

The FATF and MONEYVAL adopted the reports at their respective plenary meetings, in October 2019 and December 2019, respectively.