Rosfinmonitoring Director Yury Chikhanchin spoke at a meeting of the Federation Council during the “government hour” about progress in implementing the law on combating illicit financial transactions
Тhe Head of the agency thanked the senators for their contribution to the establishment of the Russian antimoney laundering system.
“The support provided by the upper house over the past three years has led to the adoption of 17 federal laws in this area, which have significantly improved the effectiveness of these efforts and their compliance with the international standards.”
Yury Chikhanchin reminded participants that the next round of the FATF assessment of Russia, is scheduled for 2018.
“In 2018, the international community will conduct another assessment of Russia’s antimoney laundering system. While until recent times it was more about technical compliance – whether the country adopted the relevant laws or built relationships between various AML system participants – this time round we must demonstrate to the FATF our financial measures to combat money laundering and their effectiveness at the state level, ranging from financial institutions reporting suspicious transactions to the judiciary bodies convicting for confiscations of criminal proceeds,” he said.
According to him, about 350,000 customers were denied service in 2016, which helped to prevent laundering of about 300 billion rubles of dubious origin. “The majority of the customers who were turned away – legal entities and individuals – did not contact banks again, which allows us to conclude they were socalled ‘shell companies’.”
On January 1, 2017, the Bank of Russia launched a mechanism for bringing the list of such persons to the attention of financial institutions. This will allow us to significantly reduce the number of suspicious transactions, stressed the Head of Rosfinmonitoring.
It is important to raise the level of regulatory compliance in the financial sector, said Yury Chikhanchin. He also briefed participants about the projects launched by the agency in 2016. “They include, in particular, the ‘personal account’ that allows credit and noncredit institutions, currently on a voluntary basis, to look at themselves through the supervisor’s eyes.”
The work carried out jointly with the Central Bank, Federal Security Service, Ministry of Internal Affairs and Investigative Committee resulted in shutting down 12 illegal financial centres that handled illegal funds totalling over 63 billion rubles. “It took the joint effort of law enforcement agencies from four different countries to close down just one such financial centre, whose services were used by 9 banks. The investigation into the activities of this centre helped to identify and freeze a number of foreign assets, including yachts and hotels.”
According to Mr. Chikhanchin, the defence procurement sector has become a testing ground for a fundamentally new system of state control over public procurement “In 2016, we expanded our experience in preventing the embezzlement of public funds through early notification of the relevant departments and authorized banks, resulting in the preservation of public funds totalling 5 billion rubles and recovery of about 400 million rubles in damages.”
Suspicious transaction reports were used in 2016 to initiate approx. 40,000 investigations; more than 800 criminal cases featuring materials provided by Rosfinmonitoring were referred to courts, resulting in more than 500 convictions, 2,5 times more than in the previous period.
The agency’s joint work with law enforcement and supervisory authorities helped to preserve a total of 130 billion rubles, including 96 billion rubles of public funds, and to recover 47 billion rubles, including 17 billion rubles in confiscated property and reimbursed damage, said the Rosfinmonitoring Director.
After his speech, Yury Chikhanchin answered questions from senators about the prospects of combating new criminal schemes, the use of modern technologies for money laundering and the volumes of dubious financial transactions.
Following a discussion, participants adopted the draft recommendations of the Federation Council, which will be finalized taking into account the proposals made by the senators.