Russia’s role in FATF under review amidst growing money laundering, terrorist and proliferation financing risks

Russia’s invasion of Ukraine is a “gross violation” of standards committed to by members of the Financial Action Task Force (FATF) which has said it will “consider what future steps are necessary to uphold these core values.”

A statement issued by the financial watchdog expresses its grave concern about the invasion’s impact on the money laundering, terrorist financing and proliferation financing risk environment as well as the integrity of the financial system, the broader economy and safety and security.

Reviewing Russia’s role

The actions of the Russian government run counter to the watchdog’s core principles and represent a gross violation of the commitment upon which FATF ministers agree to implement and support the Paris-based organisation’s standards according the statement.

It says the task force is reviewing Russia’s role at the FATF and will consider what future steps are necessary to uphold these core values.

AML/CFT controls in jeopardy

The statement notes that malicious cyber activity targeting financial institutions and systems undermines financial integrity and stability, and could jeopardise the ability of the private sector and competent authorities to implement and monitor core anti-money laundering and counter financing of terrorism (AML/CFT) controls.

“Such activity could prevent access to financial services for legitimate users needing to access vital services,” the statement concludes.

Ukrainian AML threat

The FATF says it is also concerned about whether Ukraine will be able to sustain the progress it has made in combating its money laundering risks relating to corruption and the theft of state assets, and the steps taken to r ecover assets stolen by senior officials of the former regime.

The task force says it is concerned that the current military invasion and other activities by Russia may inhibit that progress.

Financial system risks

All jurisdictions should be vigilant to the possibility of emerging risks from circumvention of measures taken in order to protect the international financial system from the money laundering, terrorist and proliferation financing risks resulting from Russia’s aggression against Ukraine the statement concludes.

The FATF Public Statement on the Situation in Ukraine can be found here.

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