Speech by the Director of Rosfinmonitoring Yu. Chikhanchin at the International Scientific and Practical Conference Seventh Eurasian Anti-Corruption Forum “Law and Ethics in Conflicts of Interest”

Published: 25.04.2018

The Federal Financial Monitoring Service considers work on preventing corruption practices as one of the key elements of the system of countering legalization of criminal proceeds and carries out such work in compliance with the principles and standards of the Financial Action Task Force on Money Laundering (FATF).

Next year, Russia will have to undergo another assessment of compliance with international standards and to prove again the effectiveness of the national anti-money laundering system. To a great extent, our performance results will depend on the ongoing anti-corruption work, and, first of all, on creating the necessary regulatory framework, including its formation in conformity with international standards and requirements.

For example, last year the Russian Federation ratified the Council of Europe's Convention on laundering criminal proceeds, including, inter alia, issues related to confiscation of criminal proceeds, as well as the possibility of extrajudicial freezing of assets.

Interdepartmental interaction is one of the most important activities regulated by the Convention.

With the aim to evaluate crime risk implications in this area, the information from the following sources is analyzed:

  • requests of Russian law enforcement agencies;
  • requests of foreign financial intelligence units with respect to financial activities of Russian nationals, legal entities affiliated with them and identified overseas property;
  • requests of public authorities in relation to implementation of Presidential Order No. 309.

In 2016 Rosfinmonitoring verified approximately 30 thousand citizens and their relatives, which are subject to the Laws "On Civil Service" and "Counteracting Corruption". Due to such inquiries, the qualification board of judges conducted background checks of more than 4 thousand candidates who claim to the position of judges, and their relatives.

Information search (own-initiative investigation) for suspicious financial transactions is conducted for this category of persons by screening Rosfinmonitoring's resources.

With the aim to prevent illegal financial transactions, Rosfinmonitoring:

  • participates in the creation of a state financial control and supervision system;
  • facilitates the increased transparency of operations of business entities and financial institutions, including the mechanism of remote monitoring of these enterprises, including using the so-called "Personal Account".

All of the above is aimed, first of all, at identifying corruption risks. In the opinion of the international community, these risks are the conditions and resources in the system of state and municipal management that provide the opportunity for the actions (omission to act) of officials and ordinary employees of public authorities to illegally extract material and other benefits while performing their official duties.

Monitoring of financial operations (transactions) associated with the risks of laundering proceeds from corruption-related crimes in the regions of the country shows that the identified shady transactions are primarily related to the use by officials of their administrative resources when concluding governmental contracts with reporting organizations, lobbying the interests of various business entities, including those registered in the name of persons who have friendly and family ties with these officials, and also upon entry into real estate transactions, purchase and sale of cash foreign currency, and other transactions.

Among traditional risks related to a corruption counteracting area is the risk of undeclared accounts, real estate property and other assets of public sector employees, which indicates a distorted legal consciousness of employees and a disposition to commit corruption offenses.

As regards measures of preventing corruption practices, they include conduct of financial investigations, which number exceeded 3 thousand in 2017. The number of criminal cases with corruption implications, that were handled and investigated with participation of Rosfinmonitoring, was about 450, and 155 cases of them were with involvement of public officials.

It should be emphasized that Rosfinmonitoring actively participates in discussion of anti-corruption issues on international platforms and forums, which count  several dozens.

Concerning international collaboration, it is also noteworthy that Rosfinmonitoring is constantly analyzing materials published online via digital media, for example, such as the Panama papers, the Paradise, the English dossier, etc.

According to the analysis results, thousands of foreign companies indicated in the above dossier bases are controlled by Russian nationals. Many suspicious financial transactions with participation of entities controlled by Russian citizens have been identified for a total amount of several billion rubles. The investigation also revealed a connection with a number of Russian public officials, including those from governor's offices, deputy corps, and officers of executive authorities at various levels. The results of the investigations were sent to law enforcement agencies.

At the same time, timely identification of suspicious operations involving officials, made by both foreign partners and the Russian private sector, makes it difficult for banks and other financial organizations to uniquely identify the client as a public official. Until now, the issue of determining the state authority responsible for the formation, administration and updating of the centralized register of public officials, as well as distribution of such list to the concerned bodies and organizations, remains among the top issues on the agenda. It is worth noting that not only Russia faces such challenge. Practically no other country has approved such a list, taking into account the existing international risks.

Rosfinmonitoring, due to its powers and capacities, has a unique set of tools for preventing corruption practices, including conflicts of interest, which brings clear results. Making use of reliance on international standards in the anti-corruption area, we employ the best practices of countering corruption and distribute them to the concerned agencies and organizations.

Thanks to the continuously improving system of financial monitoring in our country we are persistently building a barrier to prevent use of financial instruments covering corruption proceeds.

The raised issues and problems indicate that the anticorruption topic remains on the top of the agenda and requires new challenges and continuous improvement measures. This is the subject matter of our meeting.

I wish success to the participants of the forum, and what is most important, to develop measures and figure out ways to significantly lower this type of crime.

Thank you for attention.