Financial Crime World

Russia’s Financial Institution Risk Assessment Critiqued: Supervision and Investigation Shortcomings Identified

FATF-Eurasian Group-MONEYVAL Assessment Highlights Russian Federation’s Efforts to Combat Money Laundering and Terrorist Financing

A recent assessment by the Financial Action Task Force (FATF), Eurasian Group, and MONEYVAL has evaluated Russia’s understanding of its money laundering and terrorist financing risks, as well as its policies and laws aimed at addressing these threats. While recognizing significant progress in Russia’s approach to combating financial crime, the report also highlights shortcomings in supervision and prioritizes the investigation and prosecution of complex money laundering cases.

Key Findings

  • Russia recognizes significant money laundering risks stemming from criminal activities within the country, including corruption and narcotics trafficking.
  • The national risk assessment, combined with expertise from law enforcement agencies, has enabled the country to identify and comprehend its risks, including terrorist financing threats.
  • The Russian legal framework effectively addresses these risks, backed by strong domestic coordination and cooperation.

Challenges Ahead

Despite this progress, Russia faces challenges in: + Freezing assets linked to terrorism, terrorist financing, and proliferation of weapons of mass destruction without delay + Ensuring that obligations extend to all natural and legal persons + Strengthening oversight of the banking sector and mitigating the risk of criminals controlling financial institutions + Addressing deficiencies in licensing and sanctions for non-compliant banks

Industry Insights

  • Financial and non-financial entities, such as accountants and auditors, generally understand how their services could be used to facilitate money laundering or terrorist financing.
  • The mining precious metals and stones industry’s understanding of risk is lagging behind the country’s overall risk assessment.

Progress Since 2008 Assessment

Since its last assessment in 2008, Russia has enhanced its comprehension of the money laundering and terrorist financing risks it faces and developed a robust legal framework to address them. However, concrete steps must now be taken to address identified areas of weakness.