Russia’s Central Bank Governor, Elvira Nabiullina said on Wednesday that there were no reasons for Russia to be added to the Black List by the Financial Action Task Force (FATF).
She said that there are no objective, technical reasons for adding Russia to the “Black List” and that Moscow had implemented an effective system to counter money laundering. She also said that this decision is going to be a politically motivated one and if it is decided so, it of course will have negative consequences for Russia.
FATF suspended Russia’s membership in February stating that Russia’s actions in Ukraine are contradicting its core principles aiming to promote security, safety, and the integrity of the global financial system. FATF President said that Russia is the first country to be suspended, though it remains a member, it is barred from attending meetings and accessing documents.
Ukraine, which is not a member has urged FATF to add Russia to the Black List in its upcoming meeting this week.
Financial Action Task Force (FATF)
FATF is a global organisation formed to keep a watch on Terror Financing and Money Laundering. It is born out of a G7 meeting of developed countries in Paris in 1989. It is Headquartered in Paris, France.
Initially, its objective was to combat money laundering. After the 26/11 attack, it was expanded to incorporate efforts to combat terror financing as well and later went on to add efforts to counter the financing of proliferation of Weapons of Mass Destruction (WMD).
FATF basically adds countries into 2 lists,
Grey List for Jurisdictions under increased monitoring – These are the countries that are considered safe havens for supporting terror funding and money laundering.
Black List for High-risk jurisdictions – This list includes Non-Cooperative Countries or Territories that support terror funding and money laundering.
As of now, there are three Black Listed countries, North Korea, Iran and Myanmar. Myanmar was recently added to the list after its military leadership took over the government through a coup in 2021.
Impact on Russia
FATF instead of imposing direct sanctions on concerned countries, suggests the international financial institutions, majorly, IMF, World Bank and Asian Development Bank to impose heavy sanctions on the Black Listed Countries. These sanctions can potentially destroy economies. If these sanctions are imposed on Russia it will not be able to receive any financial aid and companies around the world will be fearful to make business deals with Russia.
There were reports, primarily from Western media outlets, that Russia is putting pressure on India to help avert global financial isolation. Reports also claimed that Russia has warned India about the oil and weapons deal being at risk if there are sanctions imposed on Russia. However, nothing has been no official comments from both India and Russia on the same.
US being against Russia will push strongly to punish Russia by imposing sanctions. US wants to weaken Russia financially so that it is no longer able to fight the war in Ukraine. As FATF majorly consists of Western Europe and North American countries, which are allies of the US, it will be easy for US to do so. Russia is most likely to go into the Black List.
