PARIS ‑ The international body leading a campaign against money laundering struck Russia from its blacklist on Oct. 11, but threatened Ukraine and Nigeria with tough measures if they did not tighten controls on “hot money.”
The decision was a boost for Russia’s efforts to be accepted as a peer of the world’s leading economic and political powers, which have used the Financial Action Task Force to focus on havens for tax dodgers and groups funding terrorist acts.
“As a result of the implementation of significant reform to its anti‑money laundering system, Russia was removed from the FATF’s list of non‑cooperative countries,” the FATF said in a statement after a three‑day meeting in Paris.
FATF president Jochen Sanio said it was clear the legislation had the full authority of President Vladimir Putin behind it and the agency was “extremely impressed” with how quickly Russia’s parliament, the Duma, passed the laws.
“Russia moved forward on the fast track with the speed of a Grand Prix racing car,” Jochen told a news conference. “The progress … should be given a standing ovation.”
Russia was one of a dozen countries on the blacklist.
The extent of reform in Russia was highlighted by evidence of good practice gathered by an FATF team not only in Moscow but in banks and with state prosecutors in the provinces.
The FATF was so impressed with Russia’s progress it accepted a request from Moscow for observer status at the agency.
Jochen said Russia’s bid to put its financial house in order was so successful that it could become a full member in 2003.
That would mean Russia joining the world’s seven leading economic powers which set up the FATF in 1989 – it is already is a member of the G8 – and some 30 other countries.
The group extended its work after last year’s Sept. 11 attacks on the United States to find ways of choking off funds to terrorist groups.
The agency, meeting at the headquarters of the Organisation for Economic Co‑operation and Development, were less impressed with Ukraine and Nigeria.
It gave both countries until Dec. 15 to show big steps to pass legislation on money laundering to meet international standards or face counter‑measures.
For Ukraine and Nigeria, being on the blacklist already means governments have issued advisories to banks and the business community warning of the risks of dealing with them – a negative signal for investment which falls short of economic sanctions.
FATF secretary‑general Patrick Maulette said additional measures meant enhanced surveillance of financial transactions from those countries, from banks and private individuals. Nauru is the only country facing such counter‑measures.
“They came forward very late to say the legislation process had now started,” Sanio said. “The meeting was merciful in not enacting counter‑measures immediately.”
He said if Ukraine and Nigeria failed to meet the required standards, international financial institutions would “stop any relationship” with them.
“The consequences could be very negative,” Sanio said.
Dozens of tax experts and financial intelligence officials from around the world reviewed the blacklist at their talks.
Others delisted were Dominica, Niue, and the Marshall Islands.
Other countries on the blacklist were not cited for ultimatums. They include the Cook Islands, Egypt, Grenada, Guatemala, Indonesia, Myanmar, the Philippines, and St Vincent and the Grenadines.
The agency’s work has focused mainly on national laws on supervision and policing of financial transactions. The anti‑terror drive has created a new challenge because money involved can be legitimate in the first place, unlike cash from drug trafficking or other underworld activity.
