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Politico: FATF May Add Russia to Blacklist
The international Financial Action Task Force plans to discuss the bill next week. Ukraine's special operation led to Russia's membership being suspended in 2023.
Politico reported that the Financial Action Task Force (FATF) plans to consider adding Russia to its blacklist next week. The meeting is scheduled for October 22.
Politico notes that Russia could be blacklisted not only for money laundering, but also for terrorism financing and weapons of mass destruction proliferation. A rating downgrade would require approval from all 55 FATF member countries, including China, India, Turkey, and South Africa. Will Russia's rating be downgraded and what will it change? HSE professor and author of the Bitkogan Telegram channel Evgeny Kogan says:
Ukraine is seeking to have Russia added to the FATF's list of high-risk countries. Kyiv has consistently made new arguments for downgrading Moscow's status since first proposing it in April 2022.
According to Politico, this time it may not be about money laundering charges, which are the main criteria for blacklisting a country.
For the new meeting, Kyiv prepared a "document" on Russia's cooperation with other countries on the "black list": North Korea and Iran. This points to Russia's financing of paramilitary groups, such as the Wagner PMC. And the role of Telegram channels and cryptocurrencies in "financing terrorism" is mentioned. Kyiv also accused Russia of laundering money received from the sale of grain exported from Ukraine. Could these claims influence the FATF decision? Grigory Nstratov, partner at Forward Legal, says:
"There is no reason why the importance of these claims should increase right now. As far as I understand, the status of these claims has not changed in any way. - So what are the main factors that influence or affect this in the case of Russia? - In fact, despite the suspension of Russia's membership in the FATF, the Russian Federation complies with all the recommendations developed by the FATF. These recommendations are implemented in our legislative base and by-laws, and as long as we comply with all the rules developed by the FATF, there are no formal grounds to believe that we are violating them, including as a result of our interaction with Iran or North Korea. . Look, Russia has not taken any steps to reverse the steps it took earlier. So there are no new proposals for the FATF to consider. Cooperation with Iran itself is not prohibited. The only problem is that, following the FATF recommendations, each country that interacts with Iran must introduce especially enhanced monitoring of such transactions and ensure that funds coming from Iran do not contain such content. The origins of terrorism-related crimes. Conversely, ensure that funds destined for Iran are not used for purposes related to terrorist activities.
FATF has already considered the possibility of blacklisting Russia several times. National ratings are re-evaluated three times a year. So far, the matter has been limited to the termination of Moscow's participation in the organization from February 2023. At the same time, Russia had to fulfill its obligations as a member of the group. Rosfinmonitoring stated that the suspension of participation does not affect international settlements in any way.
But being blacklisted will have far more serious consequences, says lawyer Andrei Goltsblat.
“Currently, the mechanisms between countries for transporting goods, paying for them and receiving compensation for export services are likely to become quite complex. And perhaps the most important relationship is with India. India must follow the FATF recommendations and take certain steps if Russia is included in the FATF list. There is a risk that the CIS countries will have to significantly tighten financial control over the operations carried out by Russia. As practice shows, the sanctions imposed on Russia have been working for a long time, and it is difficult to come up with something different here. But perhaps this will change the behavior of foreign banks, significantly strengthening their control. - There was information that last year they already considered the possibility of adding Russia to the blacklist, but did not dare to do so. Now, it seems that Russia has begun to cooperate more with Iran and North Korea from this list. Can these circumstances and details somehow affect the position and decisions of the FATF? - I think it will have some effect. In the end, it will really be an individual decision, evaluating all the events and news, and it will probably be one of the discussions that are discussed within the FATF, and a consensus will have to be reached in deciding whether to include the country or not. It is on the FATF list.
In 2000, Russia was already on the FATF blacklist. At that time, it was not yet a member of the organization. However, as experts note, compliance was not yet widespread at that time, and the country's rating did not have much influence on the international consensus. During this period, Russia adopted several tough laws to combat money laundering. Moscow's rating was raised in 2002, and a year later, Russia joined FATF.