At its plenary meeting on February 21-23 in Paris, the FATF (Financial Action Task Force) once again ignored Ukraine’s call to add Russia to the list of high-risk jurisdictions – the so-called “blacklist”.
The FATF merely recalled its statement condemning Russia’s actions a year ago and added that “members note with concern the potential risks to the international financial system, including Russia’s growing financial ties to countries subject to FATF countermeasures, the risks of financing the proliferation of weapons of mass destruction, and malicious cyber activity and ransomware attacks.”
The organization noted that, given the seriousness of these risks, many FATF members are taking proactive measures to protect themselves and the global financial system, and reiterated its call for all jurisdictions to remain vigilant in relation to the above risks.
“As we have done since the outbreak of Russia’s aggressive war, FATF members will continue to monitor the situation and the risks to the global financial system. As a suspended member of the FATF, the Russian Federation remains responsible for fulfilling its obligations to implement FATF standards,” the updated statement reads.
The Ministry of Finance of Ukraine, for its part, welcomed these expanded comments, but emphasized that they do not comprehensively address the Kremlin’s continued and deliberate disregard for FATF standards and principles since its membership was suspended a year ago.
“The Ministry understands the political problems associated with reaching a consensus on further measures, but the facts show that more needs to be done to counter the threats that Russia poses to the integrity of the global financial system,” the Finance Ministry said in a statement on Friday.
The Ukrainian ministry recalled that last year Russia increased its arms trade with FATF blacklisted states Iran and North Korea, and since December, evidence has continued to emerge that Russia is purchasing North Korean missiles for use on the battlefield against Ukraine, in violation of UN sanctions.
Kyiv believes that at its next plenary meeting, the FATF should adopt tougher restrictive measures to mitigate these serious threats. The Ministry of Finance of Ukraine also called on individual countries not to wait for the FATF’s decision, but to add Russia to their national lists of high-risk jurisdictions, which will require a more thorough examination of all transactions related to Russia and other restrictive measures.
“The FATF, an organization charged with ensuring the safety of the global financial system, must fulfill its mandate. The absence of more stringent restrictive measures dangerously plays into the hands of the Kremlin, giving it and possibly other malicious actors the green light to continue the gradual destruction of the rules-based international structure,” commented Finance Minister Sergii Marchenko on the decision of the plenary session.
The FATF communiqué states that the plenary session chaired by T. Raja Kumar from Singapore was attended by delegates from over 200 jurisdictions. Among the key outcomes is new risk-based guidance on the implementation of Recommendation 25 on beneficial ownership and transparency of legal entities.
The Plenary also agreed to publish for public comment a number of options for potential changes to Recommendation 16 and its Interpretive Note on wire transfers. The proposed amendments are aimed at adapting the FATF standards to changes in payment system business models and messaging standards, as well as at ensuring that they remain technology-neutral.
The organization added Kenya and Namibia to the list of jurisdictions under enhanced scrutiny that are working with the FATF to address strategic deficiencies in their anti-money laundering regimes, while removing Barbados, Gibraltar, Uganda and the UAE from the list due to significant progress.
The plenary agreed to appoint a new FATF president for a two-year term starting in July 2024: Elisa de Anda Madrazo of Mexico, who served as FATF vice president from July 1, 2020, to June 30, 2023, will take over from Elisa de Anda Madrazo.
