Russia ‘grossly violated’ global financial system, watchdog rules

The Financial Action Taskforce (FATF), the international anti-money laundering watchdog, suspended Russia’s membership with immediate effect on Friday (24 February) due to the country’s attack on the “security, safety and integrity of the global financial system”.

This is an unprecedented decision in FATF’s history, approved by all country members during the watchdog’s plenary on Friday.

FATF President T. Raja Kumar told journalists Russia’s invasion of Ukraine “violated commitments to international cooperation and mutual respect” that form the international organisation’s core principles.

As such, “all jurisdictions [must] remain vigilant of threats to the integrity, safety and security of the international financial system arising from the Russian Federation’s war against Ukraine” and take necessary actions where required, a press release reads.

From the start of the full-scale invasion exactly one year ago, FATF took measures to limit Russia’s influence within the organisation. This included preventing Moscow from holding leadership or advisory roles, or taking part in decision-making or standard-setting. Russian officials were also banned from accessing meetings, either in-person or virtually.

With the latest plenary’s decision to stop Russian officials from gaining access to any FATF-related documents, the country has “effectively been side-lined from the organisation”, Kumar added.

However, Russia is still expected to contribute financially, and “remains accountable for its obligations to implement FATF recommendations”, Kumar concluded.

FATF, which is hosted by the Organisation of Economic Cooperation and Development (OECD) in Paris, leads global action against money laundering as well as terrorism and proliferation financing. It promotes global standards through a set of international recommendations, and runs country legal framework evaluations.

The FAFT’s latest evaluation report on Russia was released in December 2019.

“The Russian Federation has an in-depth understanding of its money laundering and terrorist financing risks and has established policies and laws to address these risks, but it should […] prioritise the investigation and prosecution of complex money laundering cases, especially concerning money being laundered abroad,” the report reads.

The decision comes a day after the United Nations General Assembly overwhelmingly adopted a resolution marking the war’s anniversary and demanding Moscow pull out and stop fighting.