After several days of discussion, the Financial Action Task Force (FATF), one of the world’s leading anti-money laundering watchdog groups, has issued a statement regarding the increasingly close relationship between blacklisted North Korea and the Kremlin. It chose not to blacklist Russia last week, despite Kyiv urging member states to do so. And Iran.
The FATF, which monitors illegal financial activities such as money laundering and terrorist financing, suspended Russia’s membership in February 2023, citing Russia’s actions against blacklisted countries and cybercrime.
The international body met in Paris from October 22 to 25 to discuss which countries should be removed from the gray and black lists. However, while the FATF upheld Russia’s suspension, it was unable to take the punishment one step further by labeling Russia a “high-risk country”, a move that is against the Western-led sanctions regime that seeks to ostracize Russia from the rest of the world. It was another victory for Russia.
The FATF said it condemned Russia’s full-scale invasion of Ukraine, but said the organization would need the full agreement of its 40 member states to add Russia to its no-go list. Some countries, such as South Africa and Brazil, have approached Russia on a friendlier basis than Western countries.
The FATF said it condemned Russia’s full-scale invasion of Ukraine, but said the organization would need the full agreement of its 40 member states to add Russia to its no-go list.
Ukraine, which is not a member, has been lobbying the FATF to classify Russia as a high-risk country, but to no avail. Ahead of the Paris plenary, Kiev submitted documents to the FATF proving Russia’s growing ties with North Korea and Iran, both blacklisted states.
In a press release before the meeting, the Treasury Department said, “Russia is allowing sanctioned countries, such as North Korea and Iran, back door access, destabilizing the international financial system, and threatening the security and soundness of the global economy.” said.
The Ukraine documents also mention Russian funding of the Kremlin-funded mercenary group Wagner Group, the role of cryptocurrencies in Russian terrorist financing, and money laundering from stolen Ukrainian goods such as grain and minerals. Politico reported that.
North Korean leader Kim Jong Un (Republican) and Russian President Vladimir Putin attend a welcoming ceremony at Kim Il Sung Square in Pyongyang, North Korea, June 19, 2024. (Gavril Grigorov/POOL/AFP via Getty Images) Russian President Vladimir Putin meets with Iranian President Masoud Pezeshkian at the BRICS Summit in Kazan on October 23, 2024. (Maxim Shemetov/Pool/AFP via Getty Images)
Blacklisting Russia would have sent a strong symbolic message about the international community’s support for Ukraine, says the London-based research group Royal United Services Institute (RUSI) on Finance and Security. Guarantee Center Director Tom Keatinge told the Kyiv Independent newspaper.
“Realistically speaking, countries’ financial systems (both banks and their regulators), which are inexplicably indifferent to the Kremlin’s murderous activities, will also be forced to pay attention to the transactions they handle. ‘ he added.
Keatinge said Russia is violating UN sanctions and FATF standards by blatantly cooperating with North Korea. According to the Treasury Department, North Korea is supplying Russia with missiles and troops in exchange for oil to step up its war against Ukraine.
The Treasury also highlighted Russia’s procurement of ballistic missiles from Iran and the close banking and financial cooperation between the two adversaries. A few days before the meeting, the ministry stressed the importance of decisive action and looked forward to FATF’s lead.
Ukraine’s Finance Minister Serhiy Marchenko said on October 17 that “failure to counter Russia’s defiance will weaken the foundations and future stability of the global financial system.”
“Failure to counter Russian defiance will weaken the foundations and future stability of the global financial system.”
Keatinge said it was unclear why the FATF did not punish Russia more harshly, but noted that the multinational organization is “divided” on geopolitics. He suggested that if the FATF is not willing to take serious action, the US, EU and Ukraine’s allies will further tighten sanctions.
Ukrainian Finance Minister Serhiy Marchenko attends the Ukraine Reconstruction Conference held in London, UK, on June 21, 2023. (Chris J. Ratcliffe/Bloomberg via Getty Images)
“It’s time to take the gloves off,” he said.
The threat Russia poses to the global economy will increase as Russia becomes more desperate at war, its battlefield successes limited and its economy strained, the Treasury Department warned.
The FATF told its members to remain vigilant against emerging risks, and the Treasury Department said it would work with governments to combat Russian financial crimes. Russia continues to work with Russian-based cybercrime organizations, such as Evil Corp, to target the global economy, including the economies of several FATF member states, the ministry alleges.
The United States recently sanctioned members of Evil Corp for developing and distributing the Dridex malware. Over 40 countries and hundreds of banks were affected by this malware, resulting in $100 million in theft losses and damages.
Timothy Ashe, senior emerging markets (EM) sovereign strategist at BlueBay Asset Management, said tightening sanctions would weaken Russia’s economy, start a war on Ukraine, and give Ukraine and the West leverage in future negotiations. It stressed that this would limit Russia’s ability to grant.
However, he told the Kyiv Independent that the FATF’s decision not to blacklist Russia instead once again exposed the West’s lack of leadership in containing Russia.
“This should have been a slam dunk,” he said.
dominic culverwell
reporter
Dominik is a business reporter for the Kyiv Independent newspaper. He has contributed to numerous publications including the Financial Times, bne IntelliNews, Radio Free Europe/Liberty, Euronews and New Eastern Europe. Previously, Dominic worked with Stopfake as a disinformation expert, debunking Russian fake news in Europe. read more
