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. Last Updated: 07/27/2016

Kremlin Plans to Draft Money-Laundering Bill




Stung by a series of financial scandals that have damaged Russia's image, the government plans to draft a new law to combat money laundering, Finance Minister Mikhail Kasyanov said Friday.


"The government will above all work out a new law on the struggle against the laundering of illegal incomes," Kasyanov said in televised remarks after meeting President Boris Yeltsin.


Kasyanov said the government's proposal had been welcomed at a meeting in Washington last week with representatives of the Group of Seven leading industrial nations.


The G-7 countries - the United States, Germany, France, Britain, Italy, Canada and Japan - urged Russia to crack down on corruption and capital flight and to ensure that international funds do not go astray.


The government and the Central Bank have come under close scrutiny amid an investigation by U.S. authorities into allegations of a massive money-laundering scheme by Russian businessmen, mobsters and officials.


U.S. newspapers have reported that as much as $15 billion may have been channeled through the Bank of New York, but officials say much of this could be accounted for by payments directed offshore to avoid import taxes.


The Federal Security Service, a successor to the Soviet-era KGB, said Thursday that it and other law enforcement agencies were cooperating with their U.S. counterparts in the Bank of New York probe.


The Bank of New York also says it is cooperating with the investigation. No one has been charged with wrongdoing.


Kasyanov said no real facts had been presented yet in the money-laundering scandal and did not think Russia's reputation in international financial circles would suffer long-term damage.


The International Monetary Fund has delayed release of the next $640-million tranche of a loan pending introduction of new safeguards to ensure funds are not misused.


Kasyanov said the tranche could be released in late October or early November.


Kasyanov said the G-7 countries were trying to balance their desire to help Russia with pressure from public opinion over the money-laundering scandal. He said Russia was doing its utmost to improve financial transparency.


He gave no details of the planned new law against money laundering - the process by which criminals push illegal profits through a string of banks and businesses to make them appear legitimate.


The State Duma, the lower house of parliament, approved a law, On Steps to Prevent the Legalization of Illegally Derived Income, in June, but it was vetoed by Yeltsin.


Duma Deputy Yury Shchekochikhin, a member of the liberal Yabloko party, told U.S. congressional hearings last month that Yeltsin rejected the bill because it used the broader term "unlawful income," rather than "criminal income."


"You could take some grandmother who's selling flowers at a metro stop," Shchekochikhin said, according to a transcript of the hearings. "This gave the president a reason to veto this law." A special section of the law dealt with international cooperation to combat money laundering.


Kasyanov said that at his meeting with Yeltsin the president had insisted that the draft 2000 budget should be passed without changes to the basic parameters during conciliation talks with representatives of both houses of parliament.


The State Duma rejected the budget Tuesday.


"The president is also concerned, believing the policy aimed at reforms is unchangeable, that there can be some small changes to the budget but no changes in its main policy thrust," Kasyanov said. He said there was room for budget negotiations.


But there will not be any give and take with the IMF.


"We did not expect such a tough stance would be taken," Alexei Mozhin, Russia's acting director to the IMF, was quoted in Vremya as saying.


Meanwhile, in a separate development First Deputy Prime Minister Viktor Khristenko has been chosen to replace Mikhail Zadornov as Russia's envoy to the IMF, Interfax reported.