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Countering Money Laundering and Currency Control

Legalisation of criminally obtained proceeds (money laundering) is a serious economic crime which can be closely connected to corruption, tax evasion, illicit trafficking in narcotic drugs or other criminal activities.

The integration of illegal funds into the economy undermines financial and social relationships and the national economy itself. In some cases, criminal proceeds can be used to finance terrorism and the proliferation of weapons of mass destruction.

In the modern world, much attention is paid to combating these issues at the international level. The development of international AML/CFT/CPF standards, which are to be effectively implemented in national laws and enforced by countries, is carried out by the Financial Action Task Force (FATF), a specialised intergovernmental organisation.

In Russia, the fundamental AML/CFT/CPF provisions are established by Federal Law No. 115-FZ, dated 7 August 2001, ‘On Countering the Legalisation of the Proceeds of Crime (Money Laundering) and the Financing of Terrorism’ (hereinafter, Federal Law No. 115-FZ), as well as a set of regulatory legal acts adopted in pursuance of Federal Law No. 115-FZ.

Funds funneled abroad by the banking sector in billion RUB*

Funds funneled abroad by the banking sector in billion RUB
Suspicious cash-out transactions by the banking sector in billion RUB
*The data given include dubious transactions using enforcement documents.

The Russian AML/CFT system is made up of federal executive bodies, the Bank of Russia, other government bodies and organisations, banks, non-bank financial institutions, as well as enterprises and designated non-financial businesses and professions (the full list of obliged entities under the AML/CFT legislation is set out in Article 5 of Federal Law No. 115-FZ).

As one of the key participants in the Russian AML/CFT system, the Bank of Russia regulates the activities of bank and non-bank financial institutions in the field of AML/CFT/CPF and monitors and oversees the compliance with statutory requirements by these entities. One of the primary objectives of the Bank of Russia in this area is to mitigate ML/FT risk in the financial sector. 

Bank and non-bank financial institutions shall implement a wide range of measures aimed at preventing the use of the Russian financial system for illegal purposes (in particular, they shall identify customers, their representatives, beneficiaries and beneficial owners, monitor customer transactions, identify suspicious transactions, and inform the Rosfinmonitoring (the Russian Financial Intelligence Unit) about them in a timely manner, and, in cases established by law, refuse to carry out transactions).

The result of collaboration is a steady decrease in the volume of dubious transactions.

On July 1, 2022 the Bank of Russia launched the Know Your Customer Platform (KYC Platform), a system that provides necessary information about the risk level of potential and existing clients’ involvement in suspicious transactions.

The Bank of Russia is also a currency control body that monitors FX transactions carried out by banks and non-bank financial institutions.

Currency control is part of the state policy and is aimed at ensuring the stability of the currency of the Russian Federation and the stability of the country’s domestic foreign exchange market. Fundamental currency control provisions are established by Federal Law No. 173-FZ, dated 10 December 2003, ‘On Foreign Exchange Regulation and Foreign Exchange Control’.

In modern conditions, currency control and AML/CFT/CPF tools are applied by the Bank of Russia comprehensively to prevent unscrupulous economic agents from using the credit and financial sector for illegal purposes.

Department responsible for publication: Financial Monitoring and Foreign Exchange Control Department
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Last updated on: 26.06.2024