Financial Crime World

Financial Crime and Terrorism Financing in Russian Federation: A Growing Concern

The Russian Federation is facing a significant threat to its financial system and national security due to the growing problem of money laundering and terrorism financing. The legalization of criminally obtained proceeds can lead to corruption, tax evasion, and other illicit activities, with some cases even being used to finance terrorist organizations.

The Risks

  • Money laundering poses a serious risk not only to financial relationships but also to social stability and national security.
  • The integration of illegal funds into the economy can lead to corruption, tax evasion, and other illicit activities.
  • Terrorism financing can be used to support terrorist organizations, posing a threat to global security.

Combating Money Laundering and Terrorism Financing

The Financial Action Task Force (FATF), an intergovernmental organization, has been working with Russia to develop international standards for combating money laundering and terrorist financing. Russia has implemented Federal Law No. 115-FZ, “On Countering the Legalisation of the Proceeds of Crime (Money Laundering) and the Financing of Terrorism”, which outlines the country’s AML/CFT/CPF regime.

The Russian AML/CFT System

  • The system involves federal executive bodies, the Bank of Russia, government agencies, banks, non-bank financial institutions, enterprises, and designated non-financial businesses.
  • The Bank of Russia plays a key role in regulating the activities of banks and non-bank financial institutions and monitoring their compliance with statutory requirements.

Measures to Prevent Illegal Activities

  • Customer identification
  • Transaction monitoring
  • Reporting suspicious transactions to the Rosfinmonitoring (Russian Financial Intelligence Unit)

The Results

  • A steady decrease in dubious transactions has been observed.
  • The Bank of Russia launched its Know Your Customer Platform in July 2022, which provides essential information about the risk level of potential and existing clients’ involvement in suspicious transactions.

Currency Control

  • The Bank of Russia monitors foreign exchange transactions carried out by banks and non-bank financial institutions as part of its efforts to ensure the stability of the Russian ruble and domestic foreign exchange market.

Expert Warning

Experts warn that comprehensive application of AML/CFT/CPF tools is essential to prevent unscrupulous economic agents from using the credit and financial sector for illegal purposes. Russia must continue to strengthen its efforts to combat money laundering and terrorism financing to maintain its financial stability and national security.