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. Last Updated: 07/27/2016

Task Force Sniffs Trail Of Dirty Money

The newly formed Financial Monitoring Committee is charging forward in its drive to remove Russia from a blacklist of countries soft on money laundering, announcing Tuesday that it is investigating thousands of suspicious transactions and compiling its own list of countries suspected of harboring Russian money.

"We are preparing a strategic plan to get Russia off of the blacklist," said the task force's head, First Deputy Finance Minister Viktor Zubkov, Interfax reported. "We will present it to the FATF at the end of May, and at the FATF session in June I will report on what Russia has done to be removed from the blacklist."

The Paris-based FATF, or Financial Action Task Force, is the arm of the 29-nation Organization for Economic Cooperation and Development charged with fighting money laundering.

The Financial Monitoring Committee, or FMC, was formed Feb. 1 as mandated in an anti-money-laundering law that came into force on that date. It has investigative powers and works closely with law enforcement agencies such as the Interior Ministry and Federal Security Service.

Zubkov said that after two months of work, the FMC has received 40,000 reports about suspicious transactions.

"We are now seeing how money flows are dispersed all over Russia," he said. "We are carefully analyzing all of the reports we are getting, and we already have a number of companies and individuals who we want to question because they are, in our opinion, laundering dirty money."

He did not specify which companies and individuals were under suspicion and would not say how much money was involved. Such information would only be released after investigations were completed and the cases sent to court, he said.

Zubkov also said that his committee together with the government would finish preparing the list of countries suspected of accepting laundered Russian money within the next few days. The draft list contains 54 countries, but some of them may be removed, he said.

The committee came about in a bid by President Vladimir Putin to get Russia off the FATF's blacklist. He pushed the anti-money-laundering legislation through parliament to avoid embarrassing international sanctions last year.

According to experts' estimates, more than $20 billion has fled the country over the past year and as much as $170 billion since 1997.

The anti-money-laundering law requires banks, insurers, leasing companies, brokerages and other financial institutions to report all cash transactions of more than 600,000 rubles ($19,250) by individuals or businesses. Transfers of amounts above that sum to or from suspicious locations such as offshore zones must also be reported. The FMC, while allowed to investigate, must also alert law enforcement agencies about any criminal transactions.

While Russia narrowly avoided sanctions with the legislation, the FATF decided to keep Moscow on the blacklist, saying it had not yet done enough to lose the status of "noncooperative jurisdiction."

Moreover, despite the committee's efforts, it appears unlikely that the FATF will take Russia off the blacklist anytime soon. An FATF delegation said after a visit last month that Russia was continuing to take insufficient measures to tackle money laundering. It said that the anti-money-laundering law was being implemented properly but must be amended to include checks of casinos and investment funds.

As a result, the United States, Britain and France -- the most influential FATF members -- declared Russia would stay on the list for the foreseeable future.

"It is unlikely that Russia will be crossed off the blacklist in June," Alexander Shokhin, then-head of the State Duma's banking committee, said last week, RosBusinessConsulting reported.

At best, Russia may get off the list in February 2003, he said.

Vladimir Tikhomirov, senior economist at NIKoil, said that it was too early to judge the FMC's work and that there were other factors that could determine Russia's status on the list.

"To get off the FATF blacklist, Russia needs to do more than clean up its economy and show that it has a system to fight money laundering," said Vladimir Tikhomirov, senior economist at NIKoil. "It will very much depend on the economic and political relationship between Russia and the West."

Meanwhile, Zubkov said about 150 of the 300 people expected to work in the committee are already in place. Most of them came from the Tax Ministry, Finance Ministry, Tax Police and various law enforcement agencies, he said.

The committee, with start0up costs of $6 million, is expected to become fully operational by February 2004, according to the Finance Ministry.