Preparation of the Russian Federation for the FATF Fourth Round of AML/CFT Mutual Evaluations

Rosfinmonitoring is the center for assessing threats to the national security, arising from money laundering, financing of terrorism and proliferation of weapons of mass destruction, as well as for designating counter-measures.

At the moment the Russian Federation is in the active phase of preparations for the fourth round of the FATF mutual evaluations. In order to make timely, comprehensive, coordinated efforts in this field under Russian President’s decree № 31-rp an Interagency Commission for preparation of the Russian Federation to the fourth round of the FATF mutual evaluations was established. The Commission includes representatives of LEAs, supervisory and control and other Russian state bodies in charge of AML/CFT policies. The protocols of the Commission are aimed at resolving problematic issues that arise during the preparations of Russia for the up-coming evaluations. Their objective is also to approve the key reporting papers at all the phases (such as national ML/TF risk assessment reports, summary of compliance with the FATF standards and effectiveness, etc.).

Within the framework of the fourth round of evaluations assessors examine not only the technical compliance of the country with the FATF Recommendations (whether there are institutions, legislation, mechanisms, procedures) but also the effectiveness of the state in AML/CFT/PWMD. To get the necessary balance between comprehensive understanding of the AML/CFT system effectiveness and the detailed analysis of how well its components work, the FATF assesses the effectiveness against eleven Immediate Outcomes. Each of the IOs is a key goal that the effective AML/CFT system should reach. They include understanding of ML/TF risks and coordination of actions against ML/TF/FPWMD, effective international cooperation, supervision and regulation of financial institutions and DNFBPs, application of preventive measures by the private sector organizations, transparency of legal persons and arrangements, demand for financial intelligence materials by the competent authorities, ML/TF investigations and introduction of effective sanctions, confiscation of criminal proceeds and freezing of terrorist assets as well as compliance with the UN Security Council resolutions on FPWMD.

With regard to the fact that the whole country is responsible for demonstration of its AML/CFT system’s effectiveness, the unification of all the competent authorities and the private sector organizations’ efforts during preparations for evaluations becomes a key objective.

Following the results of the evaluations international experts will determine the degree of achievement by the national AML/CFT system the goals of the FATF standards, as well as provide specific recommendations for its improvement.

According to the outcomes of the previous assessment in 2008, the FATF experts identified a number of shortcomings (including inadequate transparency of information on beneficial owners and control over legal entities), which led to the placement of Russia on regular monitoring.

In September 2014 after successful presentation of the Russian report on progress to the MONEYVAL Plenary, our country was removed from the regular monitoring until the next evaluation. With a low compliance rating in 2018 an enhanced monitoring regime will be introduced along with economic sanctions.

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The methodology for assessing the AML/CFT systems was approved by the FATF in 2013 and involves consideration of two complementary components: technical compliance and effectiveness.

Technical compliance is meeting the FATF 40 Recommendations, while the effectiveness is capacity of the AML system’s participants to achieve immediate outcomes (IOs) in elimination of ML/TF risks.