Ukraine urges the Financial Action Task Force to blacklist russia at upcoming Paris plenary over increasing risks to global financial security

The Ministry of Finance of Ukraine and the Financial Monitoring Service of Ukraine urge the Financial Action Task Force (FATF) to place the russian federation on the Blacklist as a high-risk jurisdiction at its plenary meetings in Paris on 19-23 June. 

The Minister of Finance of Ukraine Sergii Marchenko has also officially addressed ministers of finance and other ministries responsible for anti-money laundering policy in FATF member and observer states, requesting them to support russia’s blacklisting for grave violations of the FATF standards. 

The FATF leads global action to tackle money laundering, and terrorist and nuclear proliferation financing. On February 24, 2023, the FATF suspended russia's membership, calling on all jurisdictions “to remain vigilant of threats to the integrity, safety and security of the international financial system arising from russia’s war against Ukraine.” The FATF expressed deep concerns over “reports of arms trade between the russian federation and United Nations sanctioned jurisdictions [Iran and North Korea], and malicious cyber-activities emanating from russia”.

Since the membership suspension, russia has not stopped its malign behavior and continues to violate FATF standards and create serious risks for global financial security.  “Ukraine urges the FATF to blacklist russia to safeguard the global financial system. russia continues to demonstrate total disregard for the global rule of law, and the risks it poses to international financial security are increasing. A state violating the FATF standards, regardless of its size, political influence, or contribution to the global economy, must be held to account and blacklisted,” the Minister said.

“russia places nuclear weapons in neighbouring Belarus, trades weapons with blacklisted Iran, finances terrorism through Wagner and other proxies, cooperates with North Korea on its nuclear programme, launches massive cyber-attacks on Ukraine and other states, and uses crypto to launder dirty money. These are attacks on global security, which the FATF was created to help counter,” Sergii Marchenko added.    

russia has also committed a range of new violations since its membership suspension, including: 

• Acts of terror creating risks for thousands of civilians:

On June 6, 2023, russia destroyed the Kakhovka dam in the Kherson Region, causing one of the largest man-made technological disasters in Europe in decades. Through this act of terror, russia is putting thousands of civilians at risk and destroying ecosystems for generations to come. It is also further complicating the maintenance of the largest nuclear power plant in Europe as the levels of water used for cooling reactors may be affected by the disaster. 

• Proliferation financing – russia has authorised the transfer of nuclear weapons to Belarus:

On May 25, 2023, russia authorised the transfer of tactical nuclear weapons to Belarus,  the first nuclear arms transfer beyond russia’s borders since the fall of the Soviet Union.

On May 29, 2023, Belarusian President Alexander Lukashenko said that there could be "nuclear weapons for everyone", raising nuclear proliferation. concerns. 

• russia continues to trade weapons with UN-sanctioned jurisdictions:  

russian and Iranian flagged vessels are disguising shipping routes in the Caspian Sea in order to trade in arms and avoid sanctions. Analysts expect levels of nefarious activity and “dark” port calls in the Caspian Sea to remain high in 2023.

• Increasing cyber risks:  

In 2023, russia increased the intensity of cyber-espionage attacks on government organisations in at least 17 European countries.

• Intensifying efforts to circumvent sanctions:  

russia is using virtual assets to bypass anti-money-laundering checks and circumvent economic sanctions. 

• russia continues to commit the FATF predicate offence of state-sponsored human trafficking:  

In March 2023, the International Criminal Court indicted putin and other russian officials for forceful deportation of Ukrainian Children from the occupied regions, creating the risk of human trafficking. 

• Increasing levels of corruption and state capture:  

In March 2023, russia formally left the Group of States against Corruption (GRECO). The Council of Europe’s Moneyval expressed concerns over risks of grand corruption emanating from russia. 

“russia’s actions represent a gross violation of the commitment to international cooperation and mutual respect upon which the FATF Members have agreed to implement and support the FATF Standards,” Head of the Financial Monitoring Service of Ukraine Igor Cherkaskyi said. 

“Blacklisting will limit russia’s access to foreign markets and require all the FATF jurisdictions to apply enhanced due diligence and effective countermeasures to protect the international financial system from the constantly increasing risks emanating from russia. This will protect global financial security, help close off existing loopholes in sanction regimes and help stop the unprovoked and illegal war against Ukraine,” Igor  Cherkaskyi added.