Financial Crime World

Russian Federation’s Money Laundering Schemes Under Scrutiny, Experts Say

A recent report by the Financial Action Task Force (FATF), Eurasian Group, and MONEYVAL has cast a critical eye over Russia’s efforts to combat money laundering and terrorist financing. While acknowledging progress made since 2008, experts warn that the country still faces significant risks and must address several areas of weakness.

Key Findings

  • Russia has an in-depth understanding of its money laundering and terrorist financing risks, but needs to enhance its approach to supervision and prioritize the investigation and prosecution of complex cases.
  • Concerns over Russia’s ability to freeze assets linked to terrorism, financing of terrorism, and proliferation of weapons of mass destruction in a timely manner remain.
  • Significant money laundering risks emanate from corruption and narcotics trafficking, but little progress has been made in investigating and prosecuting complex cases.

Weaknesses Identified

  • Russia’s approach to supervision needs improvement, with a focus on recovering stolen funds for victims rather than investigating and prosecuting complex cases.
  • Gaps in licensing and oversight of financial institutions leave room for criminal activity to flourish.
  • Deficiencies in licensing and ineffective sanctions for non-compliant banks remain major concerns.

Positive Developments

  • Russia’s efforts to strengthen oversight of the banking sector have been recognized.
  • Cooperation with foreign counterparts through international agreements has also been praised.

Sectors of Concern

  • Certain sectors, such as accountants and auditors, have a good understanding of their potential role in money laundering, but those involved in mining precious metals and stones lack adequate risk awareness.
  • Russia’s legal framework has been praised for its comprehensive approach to combating money laundering and terrorist financing.
  • However, the country must address identified weaknesses to effectively mitigate these risks.

Consequences of Failure

  • Failure to address identified weaknesses could have serious consequences, including undermining trust in the financial system and potentially facilitating criminal activity.

Next Steps

  • The report’s findings will be considered by FATF in its ongoing efforts to combat global money laundering and terrorist financing threats.
  • MONEYVAL has endorsed the report’s findings at its recent plenary meeting.