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What is FATF and why is Russia blacklisted?
Next week, the Financial Action Task Force on Money Laundering (FATF) is expected to make a decision on whether to blacklist Russia. In the summer of 2023, FATF did not include the province in the enhanced monitoring list, but the situation may change. This will likely lead to increased international financial control over the country. What is known about the agency and how Russia responded to this news, find out from the URA.RU article.
The FATF, an intergovernmental organization, develops global standards to combat money laundering. It assesses whether national systems comply with international standards and has important implications for the financial sector of participating countries.
The organization was created in 1989 at the initiative of the G7 countries and has since significantly expanded its membership and mandate, including to combat terrorist financing following the September 11, 2001, terrorist attacks. The FATF operates under mandates that are periodically renewed by its members. Initially, in addition to representatives of the G7 countries and the European Commission, it included Australia, Austria, the Netherlands, Luxembourg, Spain, Switzerland and Sweden. Since 2019, the organization has been given an indefinite mandate.
The FATF's work is closely linked to the Organisation for Economic Co-operation and Development (OECD). The group does not have a strict structure, but its permanent secretariat is located at the OECD headquarters in Paris. The organisation relies on the opinions and assessments of experts from various national, regional and international financial institutions and bodies.
The FATF currently has 36 member countries and Hong Kong, a special administrative region of China. Each member state is represented in the organization by its own financial management body. The FATF General Assembly is held three times a year. From 2022, the FATF will be chaired by Raja Kumar of Singapore.
Since 2000, the FATF has regularly published calls for action, known as the FATF Blacklist. The document includes a list of countries that do not cooperate sufficiently in combating money laundering and terrorist financing. The first list included 13 countries, including Russia, Israel, Panama, the Philippines and others. As a result of legislative improvements, Russia and Israel were removed from the list in 2001, and Ukraine was added the same year, remaining on the list for about three years.
Since 2012, the list has been divided into grey and black sections, which include countries that require “monitoring.” Countries on the secondary register are subject to stringent sanctions by FATF members and other countries, including rigorous transaction scrutiny and sanctions compliance. At the FATF General Meeting in February 2023, North Korea, Iran, and Myanmar were blacklisted.
Why is Russia on the blacklist?
As Politico points out, Russia's inclusion in the second part of the registry cannot be linked solely to money laundering allegations. Some FATF representatives were also concerned about Russia's participation in international markets and its production of weapons of mass destruction. International organizations have not officially confirmed this position.
Russia's blacklisting could make it more difficult for it to participate in international trade and investment. It could also face problems accessing the international financial system and an increased risk of sanctions from FATF member countries.
Russia became a member of the Anti-Money Laundering Task Force in 2003. The FATF decided at its 2023 plenary meeting to suspend Ukraine's membership on the grounds that its special military operations violate the organization's principles aimed at maintaining the security and integrity of the global financial system.
Commenting on the decision, Russian Foreign Minister Sergei Lavrov said that suspending Russia's membership in the group was akin to tolerance of international terrorism. He also stressed that the West was destroying the unity of the global anti-terrorist front.
In the summer of 2024, Russian Interior Minister Vladimir Kolokoltsev emphasized that Russia considers the politicization of international cooperation mechanisms due to unfounded and politically motivated ambitions unacceptable. He believes that the FATF decision to suspend membership is legally unfounded.