On November 2, 2016, Russian President Vladimir Putin met Rosfinmonitoring Director Yury Chikhanchin.
V. Putin: Mr Chikhanchin, we marked the 15th anniversary of the Financial Monitoring Service yesterday. I would like to congratulate all your employees. Separately, we agreed that you would brief me on the agency’s performance in more detail.
Yu. Chikhanchin: Thank you very much, Mr President, for your congratulations. Indeed, we had a staff gathering yesterday and watched your video address. For us it represented both a gift and an assessment of our work.
Looking back, 15 years ago we probably never expected to achieve such results. You remember that our country was blacklisted back then. There were two attempts to pass the relevant law, the first was blocked by the Federation Council and then it was vetoed by the President. It led to the termination of international contracts, a ban on transactions and even arrests of some officials at the time. What I mean to say is that we managed to fix everything.
V. Putin: These are very revealing numbers: as of June 15, 2006 organised crime controlled 50 percent of private businesses, 60 percent of government-owned enterprises and 80 percent of the country's banks.
Y A. Chikhanchin: They are from a report by international organizations, compiled at the time when we were being blacklisted. Yes, indeed, things were really like that.
Today, of course, we have addressed this problem, and are in compliance with the FATF standards. We are currently engaged with all international organisations involved in the fight against money laundering and terrorist financing.
We have also helped our Eurasian Group partners from Central Asia to set up similar systems. In fact, we have created a financial security belt.
We are also busy fighting drug trafficking, an area where our progress has been acknowledged by the UN, and against ISIL, where we have set up an international anti-ISIS group.
We have achieved considerable progress in improving public financial literacy. I can say that about 10,000 people involved in banking and law enforcement have been trained in Russia. We also teach foreigners even from such remote countries as Peru, Afghanistan, Argentina and Mongolia.
We have established a networking institute uniting over 20 educational institutions both in Russia and abroad, where we have our departments and teach students. At present, we have 200 foreign nationals studying with us.
There are over 30 different interagency committees operating where we participate. These are governmental committees that allow us to adopt legislation and achieve concrete results.
If we look at the trends, the number of financial institutions in the country has decreased since 2000, attesting to a higher level of compliance, while the volume of reported data has, conversely, increased, which is also down to improved compliance with the law achieved by us.
Nowadays, to boost engagement with financial institutions, we have enabled the so-called personal accounts, which help measure each company's law-abiding credentials against two dozen different parameters. This allowed us to tackle several tasks. First, we have engaged them in information sharing with us, and, secondly, and more importantly, we have established a system of anti-corruption relations. In other words, we have broken the link between controlling bodies and accountable entities by enabling a remote monitoring of their activities. If a violation occurs, we signal them, and they rectify the situation.
We have set up a compliance council, where we work on major risks with bank representatives. Here are a few graphs that show how the rights we gave to the banks to independently suspend suspicious transactions are working out. As a result, over 500,000 transactions have been suspended and accounts closed this year alone, highlighting the banks' progress in abandoning shady schemes and shell companies.
The number of financial investigations is naturally on the rise, and so too is the number of opened criminal proceedings. Currently, we conduct approx. 40,000 financial investigations per year. Still, we believe our main job is to prevent crimes rather than to open criminal cases.
The enactment of the defence procurement law, whose potential for monitoring funds we discussed earlier, has certainly helped us here. According to only preliminary figures, it has saved us about 20 billion this year alone. It enabled us to place under special monitoring regime a number of projects, including such important ones as the building of the Kerch bridge and facilities for the football World Cup.
We are working with the Treasury to implement the necessary oversight mechanisms. Good progress is also being made in advancing our anti-terrorist efforts, where we, in coordination primarily with the Federal Security Agency but also the Interior Ministry, have put in place a system that allows us to detect among transaction participants individuals involved in terrorist activities.
All those who have been convicted and placed on the list are then monitored.
If we talk briefly about our results, only in the last two years, since we began monitoring public funds, as much as 225 billion has been saved, with the amount of funds returned to state as a result of criminal cases and financial investigations estimated at 300 billion. Meanwhile, the total value of suspended transactions is about 90 billion. Add to this approx. 250 billion that has been safeguarded by the banks themselves. The figures speak for themselves.
Today we have a sound system in place that allows us to spot price fixing.
We used it to identify about 90 companies committing approx. 3.5 billion-worth of violations.
We continue to work closely with the Treasury.
Our joint work with the tax authorities alone has led to the suppression of criminal schemes totalling some 25 billion.
There are three main threats we face today, and these were also, I believe, identified by the FATF at its last plenary. The first concerns cross-border transfers, especially those featuring criminal proceeds.
Here the Panama Papers come to mind.
The second pertains to the challenges posed by terrorist financing.
And the third is linked to the new payment methods, such as Bitcoin and everything else – there are too many of them. These are the areas where we are currently active.
V. Putin: Thank you.