FATF suspends Russia’s membership

Established in 1989, FATF is responsible for setting global standards that aid the fight against illegal and unwelcomed activities such as money laundering, terrorist financing, drug trafficking and many more. In the revised FATF 40 Recommendations, casinos were recognized as one of the hotspots that could be prone to illicit activities like money laundering and terrorist financing. The FATF 40 Recommendations are basically measures to control and combat the misuse of financial systems. They were devised in 1990 and revised in 1996. Due to this vulnerability, the obligations around casinos increased drastically. Since the FATF is an inter-governmental policy-making body, it stimulates and boosts political will amongst governments of nations that are a part of its body. The primary function of the political will is to drive national legislative and regulatory reforms in areas that are inflicted by the activities which the FATF stands against.

The Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, has announced the suspension of the Russian Federation’s membership in the FATF panel ?Random Institute/Unsplash

Almost 40 members are a part of this body, while over 200 countries and jurisdictions have pledged to implement FATF Standards to combat crime, corruption, terrorism and more such negative ailments that pose a threat to society. In the case of Russia, the FATF detected and condemned several obvious violations caused by a country that is part of the organization. Russia initiated an unprovoked and unjustified attack on Ukraine last year, waged war and commenced a full-scale military invasion of Ukraine. Like other global bodies that encourage world peace and stand against war and loss of innocent lives, FATF conveyed its deepest sympathies to the nationals of Ukraine. The body also acknowledged and backed Resolution ES-11/1 put in place by the United Nations General Assembly (UNGA), which demands Russia’s immediate withdrawal from Ukraine along with all of its military forces.

In addition to these unfortunate circumstances, the FATF displayed concern when reports of arms and ammunition trade between Russia and other countries surfaced. The reports mentioned that the other countries were sanctioned jurisdictions of the United Nations. Despite being suspended, the Russian Federation will still be obligated to implement the global standard of the FATF and also meet all of its financial obligations towards the body. Even when it comes to the Eurasian Group on Combating Money Laundering (EAG), the Russian Federation will remain as an active member of the Global Network. Apart from that, the FATF will continue monitoring Russia’s stance on the ongoing Russia-Ukraine war and will reinstate the Russian Federation as a member only if the right steps are taken.

FATF asks jurisdictions to remain vigilant

After the Russia-Ukraine war fiasco saw the Russian Federation removed from the FATF’s list, the body has requested all jurisdictions associated with the FATF to keep a sharp eye out for integrity threats and security loopholes. These could occur due to the ongoing Russia-Ukraine war or could happen due to unforeseeable circumstances. FATF has specifically reiterated the possible risks that could hamper the international financial system and how the jurisdictions must take necessary measures to protect the system and mitigate all of these risks.

There are certain countries where the FATF’s monitoring has increased in an effort to actively counter numerous illicit activities. The FATF monitoring increase signifies the commitment of a particular country to work on its strategic deficiencies and bring them up to par to match the global standards set by the FATF in the fastest and the most efficient way within a specified timeframe. During this timeframe, the FATF increases its monitoring in that particular country till all its standards are up to par.

Malta was removed from the FATF’s greylist in June last year

In June 2022, the nation of Malta was voted off the FATF’s grey list after the country got itself on the list exactly a year before that following an investigation that showed that the jurisdiction was not implementing the correct standards and following the correct steps to keep criminal and illicit activities at bay. The grey-listing was followed by the FATF calling Malta an “untrustworthy financial jurisdiction“.

A year after the statement and the grey-listing, Malta finally managed to get off the FATF’s greylist after the country showed significant progress in devising a plan that can be implemented to combat illegal and illicit activities in the country. Malta was under increased monitoring till the time the measures were deployed. The country was lucky to escape off the greylist as it could have also been moved to the blacklist of the FATF, which is reserved for the most egregious nations.

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