Financial Crime World

MONEY LAUNDERING TECHNIQUES IN RUSSIAN FEDERATION NEED IMPROVEMENT, SAYS FINANCIAL ACTION TASK FORCE

Overview

A recent assessment by the Financial Action Task Force (FATF), Eurasian Group, and MONEYVAL has revealed that while Russia has made significant strides in combating money laundering and terrorist financing, there are still areas of weakness that need to be addressed.

Strengths and Weaknesses

Russia’s anti-money laundering and counter-terrorist financing (AML/CFT) system was found to have a good understanding of its risks and has established policies and laws to address them. However, the assessment also highlighted the need for Russia to enhance its approach to supervision and prioritize the investigation and prosecution of complex money laundering cases, particularly those involving money being laundered abroad.

Weaknesses

  • Russia’s ability to freeze assets linked to terrorism, financing of terrorism, and proliferation of weapons of mass destruction was found to be lacking.
  • The country’s failure to extend freezing obligations to all natural and legal persons was identified as a gap.
  • Deficiencies in licensing remain, and sanctions for banks that do not comply with AML/CFT requirements are not effective or dissuasive.

Risk Assessment

Russia has recognized that it faces significant money laundering risks due to corruption and its role as a transit and destination country for narcotics trafficking. The country’s national risk assessment and in-depth knowledge of relevant law enforcement agencies have allowed it to identify and understand its risks, including terrorist financing risks.

Risk Factors

  • Corruption
  • Narcotics trafficking
  • Terrorist financing

Russia’s legal framework was found to be adequate, with formal policies in place supported by strong domestic coordination and cooperation to combat money laundering and terrorist financing. However, gaps were identified in the country’s ability to freeze assets linked to terrorism, financing of terrorism, and proliferation of weapons of mass destruction.

  • Failure to extend freezing obligations to all natural and legal persons
  • Deficiencies in licensing remain
  • Sanctions for non-compliance are not effective or dissuasive

International Cooperation

Russia has cooperated with foreign counterparts through over 100 international cooperation agreements with its financial intelligence unit, Rosfinmonitoring. The authorities make excellent use of financial intelligence based on a wealth of collected data and analyzed with sophisticated technologies to contribute to money laundering and terrorist financing investigations.

International Cooperation Agreements

  • Over 100 agreements with foreign counterparts
  • Financial intelligence unit, Rosfinmonitoring

Recommendations

The FATF recommends that Russia focus more on investigating and prosecuting complex money laundering cases, especially those involving money being laundered abroad. The country needs to strengthen its oversight of the banking sector and develop effective sanctions for non-compliance.

Recommendations

  • Investigate and prosecute complex money laundering cases
  • Strengthen oversight of banking sector
  • Develop effective sanctions for non-compliance