Russia erased from International Financial Blacklist

Russia
On 11 October 2002, Russia was removed from the Financial Action Task Force's (FATF's) International Blacklist of countries failing to take sufficient precautions against money laundering. At the same time, Russia was invited to become a FATF observer, before obtaining full FATF membership as early as next year.

The Russian government welcomed the news since as recently as last year the FATF recommended sanctions against Russia for its repeated failure to comply with international measures against money laundering. Russia was blacklisted in June 2000 as a result of which significant reforms and tougher legislation were pushed through by the Russian government (see related article 1).

Although the banking sector remains vulnerable, with transactions still being carried out offshore, Russian banks are believed to have become more transparent in the last two years as the result of the introduction of international accounting standards (see related article 2) and the implementation of additional capital controls (see related article 3).

Analysts suggest that Russia's removal from the FATF's International Blacklist is a political rather than an economic victory, inextricably linked to Russia's importance as an energy supplier to the West. Even so, it is expected that the FATF's decision will have a positive influence on the general investment image of Russia.

For further information please contact David Griston at david.griston@cms-cmck.com or on 00 7 095 2585000.

Related articles

Please copy and paste/click on the following links:

Related article 1
"Changes to Russian financial legislation", 18 October 2002
http://www.law-now.com/law-now/press.cfm?id=4852

Related article 2
"Banking reform in Russia", 10 January 2002
http://www.law-now.com/law-now/press.cfm?id=4036

Related article 3
"Russian banking reforms", 27 June 2002
http://www.law-now.com/law-now/press.cfm?id=4550