President of the Russian Federation Vladimir Putin approved the Concept for Development of National System to Combat Money Laundering and Terrorist Financing

Published: 04.06.2018

 

I. General Provisions

1. The Concept outlines the main risks of combating the legalization (laundering) of proceeds from criminal activity and the financing of terrorism, as well as the goals and main areas of the development of this national system and the realization of these goals.

2. The legal base of this concept comprises the Constitution of Russia, universally recognized norms and principles of international law, international treaties to which Russia is a signatory, Federal Law No. 115-FZ "On Combating Money Laundering and Terrorist Financing" of August 7, 2001, other federal laws, the National Security Strategy, the Economic Security Strategy until 2030, Presidential executive orders and other enactments regulating activities related to combating the legalization (laundering) of proceeds from criminal activity and the financing of terrorism.

3. The following basic definitions are used for the purposes of the Concept:

a) national system for combating money laundering and terrorist financing (hereinafter referred to as the national system) – federal executive bodies and other state bodies and organizations implementing the state policy in the sphere of combating money laundering and terrorist financing in cooperation with organizations involved in transactions in monetary funds or other assets, individual entrepreneurs acting as insurance brokers, individual entrepreneurs involved in buying up, buying and selling precious metals and precious stones, jewelry made from them and scrap of such products, individual entrepreneurs providing intermediary services in the real estate purchase transactions, lawyers, notaries, persons engaged in entrepreneurial activities in the field of rendering legal and accounting services, audit organizations, individual auditors, persons providing services for the organized trade in the commodity and (or) financial markets on the basis of the exchange or trading system license, and persons entitled to carry out clearing activities on the basis of the license for carrying out the clearing activities (hereinafter referred to as the bodies, organizations and specialists belonging to the national system) through the adoption of organizational, coordinating, analytical, operational, regulatory and informational measures;

b) threat to the national security – conditions and factors that create a direct or indirect possibility of inflicting damage on the national interests of Russia through the commission of illegal financial transactions for the purpose of money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction;

c) vulnerability of the national system – conditions and factors that lead to violations of an organizational, regulatory, logistical, and other nature that impede the activities of bodies, organizations and specialists belonging to the national system, and under certain circumstances contributing to the realization of a threat to the national security;

d) risk of conducting operations (transactions) for the purpose of money laundering and terrorist financing (hereinafter referred to as the risk of conducting operations (transactions)) – the likelihood of damaging the national interests of Russia by conducting the illegal financial transactions associated with the realization of a threat to the national security and (or) in the presence of a vulnerability of the national system;

e) national assessment of the risks of conducting operations (transactions) (hereinafter referred to as the assessment of the risks of conducting operations (transactions)) – the activities of the national center for assessing the national security threats arising from conducting operations (transactions) in monetary funds or other assets and for developing measures for countering these threats by the bodies, organizations and specialists belonging to the national system aimed at identifying and (or) preventing threats to the national security and vulnerabilities of the national system, establishing the countermeasures, as well as preventing or mitigating the negative consequences.

II. The main risks of conducting operations (transactions) identified by the national system

4. The recommendations of the Financial Action Task Force on Money Laundering (FATF) provide for taking a risk-based approach in the area of ??combating money laundering and terrorist financing that involves the assessment of the risks of conducting operations (transactions) and the subsequent allocation of resources, forces and means of bodies, organizations and specialists belonging to the national system, taking into consideration the results of such an assessment. The assessment of risks of conducting operations (transactions) is carried out on an ongoing basis. At present, the following main risks of conducting operations (transactions) are identified:

a) the risks of conducting operations (transactions) in the credit and financial sphere:

carrying out fictitious financial and economic activities;

transfer of non-cash funds to the shadow cash flow;

illegal withdrawal of monetary funds and other assets abroad; carrying out by the leaders and employees of credit and financial organizations of unlawful activities directed against the interests of these organizations and their clients, including the creation of conditions for money laundering;

b) the risks of conducting operations (transactions) in the budgetary sphere: embezzlement of budgetary funds when carrying out the procurement by suppliers (contractors, executors) of products, works and services for state and municipal needs;

ineffective spending of budgetary funds, especially when executing the tasks of the state defense order;

c) corruption risks of conducting operations (transactions): legalization of income received as a result of committing corruption crimes;

non-compliance with restrictions and violation of prohibitions established by the anti-corruption legislation;

d) the risks of conducting operations (transactions) associated with crimes committed in order to systematically obtain a large income:

legalization of incomes obtained as a result of illegal circulation of narcotic drugs, psychotropic substances and their precursors, including the use of new financial instruments and technologies;

legalization of incomes received as a result of tax evasion;

e) the risks of conducting operations (transactions) related to the financing of terrorism:

emergence of new hot spots of terrorist activity along the perimeter of the Russian Federation borders and within the country;

a new tactic used by terrorists – committing individual terrorist acts that require minimal financial costs;

use of new financial instruments and technologies to finance terrorist activity, including those that allow the anonymity of participants in financial transactions or those that are based on the crowdfunding principle;

use of monetary funds derived from legitimate sources for the financing of terrorism;

f) the risks of conducting operations (transactions) in the sphere of international relations:

escalating the international tension, and specifically through the unilateral introduction of restrictive economic measures by certain States against other States;

administering by individual States the national rules of law against persons and organizations of other States on the extraterritoriality basis;

attempting to politicize the activities of international expert structures;

impeding the economic activities of Russian residents and their foreign counterparts in foreign jurisdictions, including the repatriation of capital from abroad.

4. The risks specified in Clause 4 of the Concept are of a medium- and long-term nature and can be mitigated due to the implementation of this Concept.

III. The goals and main areas of the national system development and the realization of these goals

5. The main goals of the national system are as follows:

a) increasing the efficiency of its operation to a level that will ensure timely neutralization of the identified risks of conducting operations (transactions) and the elimination of threats to the national security without involving any additional resources;

b) compliance with the legislation on combating money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction, by organizations involved in conducting transactions in monetary funds or other assets and specialists belonging to the national system;

c) increasing the transparency of the economy, and specifically through the use of a mechanism for identifying the beneficial owners of economic entities;

d) preventing the misuse of budgetary funds and ensuring an increase in the effectiveness of their use;

e) reducing the terror threat level and extremist manifestations in society, ensuring the legality and transparency of non-profit organizations' activities;

f) further strengthening the role of Russia in the international system of combating money laundering and terrorist financing.

6. The main areas of the national system development include:

a) developing state policy and legal base in the area of combating money laundering and terrorist financing;

b) improving the mechanism of participation in the national system activities of organizations that conduct transactions in monetary funds and other assets and specialists belonging to this system;

c) bringing down the rate of crimes associated with money laundering, corruption and terrorist financing, as well as the financing of proliferation of weapons of mass destruction;

d) greater participation of Russia in the international cooperation in the area of combating money laundering and terrorist financing at the level of international organizations and other specialized structures, as well as at the interstate level;

e) improving the national system.

7. The main tasks for the formation of state policy in the area of combating money laundering and terrorist financing are as follows:

a) improving the statutory regulation and law enforcement practices in the sphere of preventing and combating economic crimes, corruption, terrorism and extremism;

b) developing a national center for assessing threats to the national security arising from conducting operations (transactions) in monetary funds or other assets and developing measures to counter these threats;

c) adapting the legislation of the Russian Federation and law enforcement practices to the recommendations of the Financial Action Task Force on Money Laundering (FATF), taking into consideration any amendments therein;

d) improving the statutory regulation of the activity areas associated with the use of modern electronic technologies.

9. The main tasks of improving the mechanism of participation in activities of the national system organizations that carry out transactions with money and other assets, as well as raising the professional level of specialists involved in this system are as follows:

a) ensuring the application of a risk-based approach in the activity of organizations engaged in transactions with cash and other assets and in the activity of specialists belonging to the national system, their assessment of threats and vulnerabilities arising from the activities of their clients, and ensuring that measures are taken to prevent or minimize the negative consequences;

b) ensuring the transparency of financial transactions and activities of economic entities, organizations that carry out transactions with cash and other assets as well as activity of specialists who are members of the national system in accordance with international standards in the field of combating the legalization (laundering) of proceeds from crime and financing of terrorism;

c) improvement of law enforcement practice for identifying organizations that carry out transactions with monetary funds and other property and specialists belonging to the national system, beneficiary owners of economic entities serviced by these organizations and specialists;

d) ensuring strict compliance with the requirements of the legislation in the field of combating the legalization (laundering) of proceeds from crime and financing of terrorism by organizations that carry out transactions with cash and other assets and by specialists belonging to the national system by improving the effectiveness of control (supervision) of their fulfillment of such requirements by using a risk-oriented approach, as well as strengthening the work on clarifying the norms of legislation in this field;

e) development of a system of state bodies exercising control over the observance by the organizations carrying out operations with cash and other assets and specialists belonging to the national system, as well as development of legislation in the sphere of combating the legalization (laundering) of proceeds from crime and financing of terrorism,  optimization of powers of such bodies;

f) adoption of legislative and other measures aimed at preventing persons with undefined or outstanding convictions for crimes committed in the economic sphere, certain crimes against public safety and public order, crimes against state power, crimes against peace and security of mankind, to the beneficial ownership of organizations that carry out transactions with monetary funds and other property;

g) drawing up of a list of public officials in accordance with the recommendations of the Financial Action Task Force on Money Laundering (FATF);

h) raising financial literacy of population and entrepreneurs in order to prevent their involvement in commission of illegal financial transactions.

10. The main tasks to reduce the level of crime associated with the legalization (laundering) of proceeds from crime, corruption, financing of terrorism and proliferation of weapons of mass destruction are as follows:

a) development of methods for identifying, investigating and uncovering crimes related to the legalization (laundering) of proceeds from crime, corruption and financing of terrorism;

b) improvement of confiscation mechanisms and other forms of seizure of proceeds from crime by persons who have committed crimes, as well as compensation for damage caused by unlawful acts to the state, organizations and citizens;

c) introduction of specialization for investigators, judges and prosecutors in investigating and handling of criminal cases related to the legalization (laundering) of proceeds from crime, corruption and financing of terrorism, in maintaining charges in court on behalf of the State on such criminal cases, as well as in increasing their qualifications in this field;

d) improvement of the activity of state forensic-expert institutions (units) in order to increase the effectiveness of expert support in the investigation and consideration of criminal cases related to the legalization (laundering) of proceeds from crime, corruption and financing of terrorism;

e) development of a system for preventing crimes related to the legalization (laundering) of proceeds from crime, corruption and financing of terrorism;

f) improvement of the activities of bodies authorized to provide international legal assistance in criminal matters and activities within the framework of international cooperation in the prevention, suppression and investigation of economic crimes, including recovery of illegally displaced assets from abroad;

g) expansion of law enforcement practice on timely detection and blocking (freezing) of assets intended for financing of terrorism;

h) improvement of mechanisms for monitoring the proper use of budgetary funds in the procurement of goods, works and services for state and municipal needs, including through treasury and bank support of contracts;

i) development of law enforcement practices and improvement of mechanisms for interdepartmental coordination in the field of countering the financing of the proliferation of weapons of mass destruction.

11. The main tasks of expanding the participation of the Russian Federation in international cooperation in the field of combating the legalization (laundering) of proceeds from crime and financing of terrorism are as follows:

a) strengthening the constructive interaction of the Russian Federation with foreign states within the Financial Action Task Force on Money Laundering (FATF) and regional groups established by its type, taking into account the priority partnership with the BRICS countries;

b) development and implementation of new forms and procedures for interaction of the Russian Federation with foreign states in the field of combating the legalization (laundering) of proceeds from crime and financing of terrorism within the framework of the Eurasian Economic Union, The Commonwealth of Independent States, the Collective Security Treaty Organization and other integration mechanisms in the Eurasian region;

c) creation of mechanisms for monitoring risks and threats arising in the Eurasian Economic Union in order to ensure its economic security by using resources of the Federal Financial Monitoring Service (Rosfinmonitoring) and the national system;

d) assistance in increasing the functional effectiveness and strengthening positions of the Eurasian Group on Countering the Legalization of Criminal Incomes and Financing of Terrorism;

e) improvement of  methodology for conducting international investigations of criminal cases related to the legalization (laundering) of proceeds from crime and financing of terrorism and the forms of participation of Russian specialists in such investigations;

f) development of Rosfinmonitoring's interaction with financial intelligence units of foreign states on issues of violation by Russian citizens of the requirements and prohibitions established by the anti-corruption legislation;

g) creation of a system for providing technical assistance to financial intelligence units of developing countries with a purpose to realize Russian interests;

h) strengthening of international cooperation in the field of combating the legalization (laundering) of proceeds from crime and financing of terrorism at the level of bodies that control (supervise) the activities of financial organizations;

i) conclusion of bilateral and multilateral international agreements on recovery of property illegally acquired and (or) formed as a result of legalization (laundering) of proceeds from crime and subsequently confiscated as a result of international cooperation.

12. The main tasks of improving activities of the national system are as follows:

a) expanding the information and technological capabilities of Rosfinmonitoring for collecting, timely processing, analyzing, storing and transmitting the necessary information at the international, federal and regional levels;

b) creation of specialized analytical units at the state bodies and organizations involved in countering the legalization (laundering) of proceeds from crime and financing of terrorism;

c) development of a unified information system in the sphere of combating the legalization (laundering) of proceeds from crime and financing of terrorism;

d) ensuring coordination of activities among bodies, organizations and specialists belonging to the national system and strengthening interaction between them;

e) determination of scientifically-based quantitative and qualitative criteria and indicators for assessing the effectiveness of the national system functioning, its individual elements and mechanisms;

e) development of state unified system for statistical recording of statements and reports on crimes, state of crime, detection of crimes, status and results of investigative work and prosecutors' supervision in order to counteract the legalization (laundering) of proceeds from crime and financing of terrorism ;

g) increasing the professional training of personnel in order to counteract money laundering and financing of terrorism;

h) ensuring the information openness of the national system.

8. Based on the results of ongoing monitoring of the implementation of this Concept, the goals and main directions of the development of the national system will be adjusted, taking into account changes that have a significant impact on it.

IV. Expected results of this Concept’s implementation

9. As a result of the Concept’s implementation, the national system must comply with international standards in the field of combating the legalization (laundering) of criminally obtained incomes and financing of terrorism and possess an optimal institutional structure, sufficient resources and regulatory support.

10. The achievement of goals and accomplishment of tasks specified in this Concept will allow to apply effective methods and measures to counteract the legalization (laundering) of proceeds from crime and financing of terrorism, which will be directed primarily at preventing the implementation of threats to national security and the risks of transactions (deals) without creating artificial regulatory barriers for the development and modernization of the economy.

11. The development of the national system will allow the Russian Federation to strengthen its positions in international structures involved in countering the legalization (laundering) of proceeds from crime and financing of terrorism.

17. The monitoring of this Concept's implementation is carried out as part of the annual report of the Director of Rosfinmonitoring to the President of the Russian Federation.