Russia’s “all-encompassing” partnership with North Korea demands FATF blacklisting

As Russia formalises its “all-encompassing” partnership with North Korea, the Ministry of Finance and the Financial Monitoring Service of Ukraine urge the Financial Action Task Force (FATF) to take appropriate steps to protect the security of the global financial system and blacklist Russia at itsupcoming plenary starting on 23 June.  

As its military continues to fail on the battlefield, russia becomes more belligerent, particularly by deepening economic and military ties with North Korea. Ballistic missiles and munitions procured from North Korea in exchange for oil – in violation of UN sanctions and FATF principles – continue to be used against Ukraine’s peaceful cities and civilians. 

An illicit financial network russia has created and cultivated underpins its malign activities in Ukraine and around the world. This week, russia announced the formalisation of financial ties with North Korea by creating “alternative mechanisms of trade and mutual settlements” to “jointly resist” the international community’s efforts to restrict both countries’ destructive behaviour. 

Russia has also intensified cooperation with Iran – a globally sanctioned and FATF-blacklisted state.The Kremlin has provided Tehran with a backdoor to access the international financial system by interlinking payment systems to bypass SWIFT sanctions and opening state VTB bank branches in Iran. Russia has also been heavily reliant on Iranian drones to maintain its illegal invasion. 

Russia continued to use cyber-attacks to target FATF member states’ critical infrastructure and private sectors, intensifying its efforts in the past year.

In February 2023, FATF took the unprecedented step to suspend russia. In February 2024, FATF issued an additional statement expressing serious concerns over the country’s increasing financial connections with blacklisted states, as well as malicious cyber activities emanating from russia.Despite these warnings, russia has not changed its behaviour. Moreover, the number and severity of violations have increased, creating further threats to the global financial system and security.  

"russia’s blatant violations have been on display for everyone to see. The Kremlin has been intensifying military and economic ties with North Korea and Iran, financing terrorist organisations inside and outside russia, weakening anti-money laundering institutions and sponsoring rampant cyber-crime. FATF has one clear way to counter these violations and provide protection to the global financial system – by blacklisting russia,” Minister of Finance Sergii Marchenko said. 

“russia continues to grossly violate FATF's principles, by serving as a backdoor for Iran and North Korea to access the global financial system. Russia also attempts to hijack objective technical processes, from vetoing North Korea sanctions monitoring mechanism inside the UN to vowing to send delegates to the upcoming FATF plenary in violation of its membership suspension. FATF now possesses an overwhelming amount of evidence to support an escalation of restrictive measures against risks russia poses. Now is the time for decisive action,” Igor Cherkaskyi, Head of the State Financial Monitoring Service of Ukraine.