What threatens Russia with getting into the “black lists” of FATF: experts gave an answer

The Financial Action Task Force on Money Laundering (FATF), the world’s financial intelligence agency, may consider excluding Russia from its membership and adding our country to the “black list” of states suspected of illegal operations. In the event of a positive agreement on both points, business relations with foreign partners remaining with domestic companies will be seriously hampered, experts are sure.

Officially, the FATF has not yet raised the topic of tightening sanctions against Moscow, however, the possibility of strengthening control over Russian financial transactions may be considered at the plenary meeting of the organization on June 19-23. Now our country’s membership in the Group has been suspended: Russia has been deprived of leadership and advisory functions, as well as excommunicated from participation in projects.

According to foreign media, Ukraine insists that the temporary measure become final. If the FATF participants agree with Kyiv’s arguments, Russia will become the first state in history to be excluded from the organization. Recall that the intergovernmental Group, whose task is to combat money laundering, was established in 1989 at the suggestion of the G7 countries. The FATF has developed lists of the most unstable countries in the fight against financial fraud. The “black list” includes North Korea, Iran and Myanmar. The group considered that it was these states that inspire the most suspicion, so financial transactions through them began to be subject to increased control, up to complete bans. The “gray list” includes 23 countries, the largest of which are South Africa, Turkey and the United Arab Emirates. All these states have committed themselves to correct the identified deficiencies. The review of the status is usually held three times a year – in February, June and December.

Russia became a member of the FATF, the number of participants of which has now increased to 37 countries, in 2023. Moscow was considered the leader of anti-money laundering processes in the Eurasian space. The FATF reports noted that the Russian leadership is constantly improving the procedure for monitoring and investigating complex corruption schemes. Until last year, when the organization limited Russia’s work in the Group for political reasons, there were no serious claims against our country.

And now the question is being raised about the exclusion of our country from the FATF and its inclusion in the “black list” of the organization. MK discussed the prospects and consequences of such a development of events with domestic experts: financial analyst Mark Goykhman and expert of IC IVA Partners Artem Klyukin.

– Officially, the FATF has not yet discussed the exclusion of Russia from its membership and the inclusion of Moscow in the “black list”. What is the likelihood that the sanctions will still be tightened?

Goykhman: – The desire of the FATF to toughen its position in relation to Russia can stimulate certain steps. Sanctions restrictions on settlements with domestic counterparties are already quite strict. However, which of the packages will our country end up in? FATF lists have a “color scheme”. The most severe restrictions are formulated in the “black” list. Any payments to recipients from such countries initially have a “presumption of guilt”, therefore they are necessarily under suspicion and thoroughly studied. Often financial companies in principle refuse to conduct transactions with such counterparties, so as not to fall under suspicion and sanctions themselves. The “grey list” provides for a softer regime for international transactions, although it contains significant restrictions.

Does the exclusion of Russia from the FATF really mean that our country is a platform for money laundering or is it a purely political action?

Klyukin: – In general, the new sanctions against Russia will be the next link in the exclusion of our country from any intergovernmental and international organizations. They will create another exaggerated information occasion as part of the formation of the image of a “rogue country”, with which the civilized world does not want to have anything in common. Exclusion from the FATF in itself is not a big risk. This will only allow Ukrainian politicians to convince their compatriots that “the whole world is with us.”

— What is fraught with exclusion from the FATF and getting into the organization’s “dumb lists” for Russia?

Goykhman: – Getting into the “black list” will have an extremely negative impact on the economic activity of our country, especially on the opportunities for developing international cooperation. In this case, already in the current difficult economic circumstances, import and export operations will additionally suffer. Companies and countries involved, for example, in parallel imports to Russia, may lose this opportunity. The restrictions will also apply to completely “household” payments. In particular, Russians will not be able to receive transfers from many foreign countries. Or, on the contrary, transfer your funds to them, including for the education of student children or the maintenance of relatives.

The inclusion of Russia in the “black list” is still hardly possible. This will hit the counterparties of domestic companies hard. This list is “multilateral”, a stick not even about two, but about many ends. It is likely that a significant number of countries will object to such a decision. Given the current environment, including Russia’s warning of its foreign partners – Saudi Arabia, Turkey, Mexico, the United Arab Emirates and Malaysia – about the risk of complicating business on both sides, a compromise option can be assumed. However, it is possible that the FATF members will not be in a hurry to change their attitude towards Russia, and our country will not be included in any lists at all.

Klyukin: In reality, expulsion from the FATF will not affect our country in any way. Financial transactions between Russia and the West are already reduced to a minimum, as are opportunities for investment. Accordingly, it is not necessary to expect from the members of the Group assistance in the return of capital illegally withdrawn from our country and laundered abroad, both for technical and political reasons. Helping the West to fight money laundering in Russia, if it were to take place in significant amounts, is not in our interests now. On the contrary, let them bring and launder as much as possible, if they can – Russian companies are now very limited in using Western financial structures for this.