Russian Federation Urged to Enhance AML/CFT Supervision and Prosecution of Complex Money Laundering Cases

Overview

The Russian Federation has made significant progress in understanding its money laundering and terrorist financing risks, but it needs to improve its approach to supervision and prioritize the investigation and prosecution of complex money laundering cases, especially those involving foreign assets.

Assessment by FATF, Eurasian Group, and MONEYVAL

According to a recent assessment by the Financial Action Task Force (FATF), the Eurasian Group, and MONEYVAL, Russia’s anti-money laundering and counter-terrorist financing (AML/CFT) system requires strengthening. The country has made significant progress in cooperating with foreign counterparts through over 100 international cooperation agreements with its financial intelligence unit, Rosfinmonitoring.

Gaps Identified

Despite some areas for improvement, Russia needs to:

• Address gaps in its ability to freeze assets linked to terrorism, financing of terrorism, and proliferation of weapons of mass destruction without delay
• Ensure that this freezing obligation extends to all natural and legal persons
• Focus more on investigating and prosecuting complex money laundering cases, especially those involving foreign assets

Areas for Improvement

Russia has:

• Made significant progress in recovering stolen funds for victims (around EUR 816 million per year)
• Strengthened its oversight of the banking sector
• Developed a robust legal framework to address money laundering and terrorist financing risks

However, Russia still faces:

• Deficiencies in licensing and ineffective sanctions for banks that fail to comply with AML/CFT requirements
• Weaknesses in the mining precious metals and stones sector, where financial and non-financial entities lack understanding of how their services could be used to launder criminal proceeds or finance terrorism

Recommendations

To address these gaps and weaknesses, Russia is urged to:

• Prioritize investigating and prosecuting complex money laundering cases, especially those involving foreign assets
• Enhance its AML/CFT supervision, including strengthening licensing and implementing effective sanctions for non-compliant banks
• Improve the understanding of financial intelligence analysis among financial and non-financial entities, particularly in the mining precious metals and stones sector

Conclusion

Russia has made significant progress in understanding its money laundering and terrorist financing risks, but it needs to address areas of weakness identified in this report. By implementing these recommendations, Russia can strengthen its AML/CFT system and improve its ability to combat money laundering and terrorist financing.