The National Bank of Ukraine has contacted the Financial Action Task Force on Money Laundering (FATF) asking to consider the following at its next FATF plenary meeting on 18–21 October 2022:
- excluding the russian federation from the list of FATF member countries
- requesting regional bodies similar to FATF to suspend russia’s memberships and deprive it of observer status in these bodies
- putting russia on the FATF Blacklist (the list of high-risk jurisdictions subject to a call for action).
This is stated in the address to FATF signed by NBU Governor Andriy Pyshnyy.
The address states these decisions should be approved in response to russia’s violations of fundamental principles of international law that created major threats to security and integrity of the global financial system. Russia’s actions are a direct breach of anti-terrorism financing restrictions and the regime of nonproliferation of weapons of mass destruction.
With unprecedented cruelty, russia continues its lawless military aggression against Ukraine and its sovereignty and territorial integrity. The crimes committed by russia – which include destroying critical infrastructure, firing rockets and shells at residential areas, educational institutions, hospitals, and cultural heritage, terrorizing civilians, conducting forced deportation, and massive torturing of civilians and servicepersons – have already caused thousands of deaths. Russia continues the genocide of Ukrainians, holds the whole world hostage with its nuclear blackmail, and has created a threat of famine in Africa and Asia by blocking and ruining the infrastructure of Ukrainian ports, laying mines and shooting at Ukraine’s agricultural land, and destroying harvests. The civilized world cannot stand aside this plight and must do all that is possible to hold the terrorist state accountable.
The functioning of russian military industry and procurement for the army and private military companies are financed not only by the budget but also by russian banking institutions, in particular by the largest russian banks, most of which are state owned and thus directly managed by russian top officials.
The russian financial system is operating in the never-changing environment of corruption, organized crime, and using illegal schemes to launder proceeds from crime, in particular involving banks of other countries.
Today the world has irrefutable evidence that the regime currently ruling in russia disdains and violates any internationally recognized principles and obligations to reach its malicious goals. In particular, this was underlined in the joint statement by G7 leaders dated 11 October 2022.
Despite the international sanctions, russia continues to cooperate with jurisdictions included in the FATF Blacklist and with terrorist organizations.
The administration of russia are deliberately distorting the reality, hoping to simulate compliance with relevant international standards by using cynical manipulations and providing formal references to FATF procedural documents.
FATF public statements of 4 March 2022 and 17 June 2022 note that actions by the russian government contradict the main principles of FATF and are a severe violation of commitments undertaken by russia as a FATF member.
However, russia still influences FATF by exercising its right to participate in FATF meetings, including the right to make speeches, access all documents, and comment on the documents. Russia also influences FATF’s decisions on other countries’ compliance with the organization’s standards, including the appointment of assessors and discussion of mutual assessments. The russian federation also remains a member of the Egmont Group of Financial Intelligence Units and another FATF-style regional body Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG).
A terrorist state being a FATF member discredits the reputation of the organization created based on principles of international cooperation and mutual trust. It is impossible to continue a dialogue based on trust and mutual respect to international law and FATF standards with a terrorist state. The dialogue is possible only after the terrorist state stops financing terrorism and threatening to use weapons of mass destruction.
Under these conditions, full exclusion of russia from FATF member countries is the most essential, adequate, and timey step. It is not acceptable to delay and remove the issue of putting russia on the FATF Blacklist from the agenda by referring to formal procedures and using any other means.
The NBU highly appreciates FATF’s efforts to ensure integrity and security of the international financial system, as well as the organization’s clear position as to condemning the russian invasion of Ukraine. The NBU hopes FATF will make further decisive, powerful, and clear steps to force the aggressor and terrorist state to stop its criminal activities.