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. Last Updated: 07/27/2016

Russia Warned on Money Laundering

PARIS — An agency waging an international crusade against money laundering issued an ultimatum to Russia, the Philippines and the tiny Pacific island of Nauru on Friday to clean up their act by the end of September or face sanctions.

The three countries were singled out in a longer blacklist issued by the Financial Action Task Force, or FATF, a Paris-based agency backed by most of the world's industrial nations, after a review of banking centers worldwide.

The full list of "non-cooperative jurisdictions" also included Cook Islands, Dominica, Egypt, Guatemala, Hungary, Indonesia, Israel, Lebanon, Marshall Islands, Myanmar, Nigeria, Niue, St. Kitts and Nevis and St. Vincent and the Grenadines.

FATF President Jose Roldan said that failure by Russia, the Philippines and Nauru to comply by Sept. 30 would trigger "countermeasures." "These will be protective measures, to protect our financial systems," he told a news conference.

Russian Deputy Prime Minister Alexei Kudrin said Moscow had registered the "unpleasant signal" from Paris but hoped to avoid any drastic steps by FATF governments once legislation to combat dirty money had made its way through parliament.

A U.S. Treasury official in Paris said the options included vetoes on licenses for overseas outlets of banks from the three countries and official FTAF government advisories to the wider business community of the risks of dealings in those locations.

The main problem for Russia was whether the bill now before parliament would actually make it onto the statute books and whether it would be radically changed on the way.

Roldan said Russia, the Philippines and Nauru would remain under close scrutiny for now, with all the others on the list. There is no hard figure for the amount of illicit cash pumped through bogus bank accounts by the underworld, but the FATF says estimates go as high as $1.5 trillion a year — as much as France's annual gross domestic product.

Friday's list marked the culmination of more than a decade of work since the Group of Seven economic powers created the FATF to combat the recycling of billions of dollars in "hot money" from crime, drugs and corruption.

The FATF, now backed by 29 governments, first issued a list of "uncooperative jurisdictions" in June 2000. The revised list let a few off the hook but added several others.

The Cayman Islands, Bahamas, Panama and Liechtenstein were removed from the list.

There was less joy for Hungary, Egypt, Indonesia, Nigeria, Guatemala and Myanmar, all of which were added to the blacklist.

Hungary's inclusion was notable for a country seeking to join the European Union, and Budapest expressed dismay, saying its listing ignored its planned anti-laundering law, which would abolish anonymous financial deposits.

France, one of the most vociferous backers of the FATF, said its government would issue advisories to financial institutions to apply "reinforced vigilance" of the listed places. And U.S. Treasury Secretary Paul O'Neill said in a statement he fully supported "countermeasures against countries refusing to implement constructive legal reforms."

The ultimatum is most sensitive for Russia, purely because of the country's size and President Vladimir Putin's determination that the country play a world role alongside the G-7 powers.