Financial Crime World

Financial Crime Definition Takes Center Stage in Russian Federation

The Russian Federation has taken decisive steps to combat the growing menace of financial crime by criminalizing the legalization of proceeds obtained through illegal activities and preventing the financing of terrorism.

International Standards for Combating Financial Crime

The Financial Action Task Force (FATF), a specialized intergovernmental organization, has developed international standards for combating money laundering, terrorist financing, and proliferation financing (AML/CFT/CPF). Russia has implemented these standards into its national laws and regulations, with Federal Law No. 115-FZ serving as the foundation for the country’s AML/CFT system.

Russian AML/CFT System

The Russian AML/CFT system is comprised of:

  • Federal executive bodies
  • The Bank of Russia
  • Government agencies
  • Banks
  • Non-bank financial institutions
  • Enterprises
  • Designated non-financial businesses and professions

The Bank of Russia plays a key role in regulating the activities of bank and non-bank financial institutions, as well as monitoring their compliance with statutory requirements.

Mitigating Money Laundering and Terrorist Financing Risk

One of the primary objectives of the Bank of Russia is to mitigate money laundering (ML) and terrorist financing (FT) risk in the financial sector. To achieve this goal:

  • Banks and non-bank financial institutions are required to implement a range of measures aimed at preventing the use of the Russian financial system for illegal purposes
    • Identifying customers
    • Monitoring customer transactions
    • Identifying suspicious transactions
    • Informing the Rosfinmonitoring (the Russian Financial Intelligence Unit) about them in a timely manner

The result of this collaboration has been a steady decrease in the volume of dubious transactions.

Currency Control and Stability

In addition to its AML/CFT efforts, the Bank of Russia is also responsible for currency control, which aims at ensuring the stability of the Russian Federation’s currency and the domestic foreign exchange market. Currency control provisions are established by Federal Law No. 173-FZ.

Comprehensive Approach to Preventing Financial Crime

The Bank of Russia applies both AML/CFT and currency control tools comprehensively to prevent unscrupulous economic agents from using the credit and financial sector for illegal purposes. The recent launch of the Know Your Customer Platform (KYC Platform) is a significant step forward in this effort, providing necessary information about the risk level of potential and existing clients’ involvement in suspicious transactions.

Commitment to Maintaining a Stable Financial System

By working together to combat financial crime, Russia is demonstrating its commitment to maintaining a stable and secure financial system that serves the interests of all citizens.