Publication: Monitor Volume: 7 Issue: 205

On Monday (November 5), Russia observed Intelligence Agent Day. By design or coincidence, Aleksei Kudrin, the deputy prime minister who doubles as finance minister, marked the occasion by officially presenting Viktor Zubkov, Russia’s new anti-moneylaundering tsar, to the Finance Ministry’s collegium. A former deputy tax minister, Zubkov will now head the Committee for Financial Monitoring (KFM), the anti-moneylaundering body that President Vladimir Putin decreed into existence on November 1. Zubkov is a long-time associate of the Russian head of state who in the early 1990s worked in the St. Petersburg city government’s external relations committee, which Putin then headed. In 1999, Zubkov ran in the St. Petersburg governor’s race, receiving 8 percent of the vote and coming in fourth. His campaign was headed by another Putin associate–Boris Gryzlov, who is currently Russia’s interior minister. In his new position as KFM chief, Zubkov will also hold the rank of deputy finance minister–a sure sign that the Finance Ministry decisively defeated the Interior Ministry in their bureaucratic turf battle for control over the new agency, which has been set up pursuant to the anti-moneylaundering law that the State Duma approved this past summer (Izvestia.ru, November 5; Kommersant, Russian agencies, November 2; see the Monitor, October 15).

In presenting Zubkov, Kudrin said that the KFM would be fully operational as of February 1, when Russia’s anti-moneylaundering law comes into effect. By that date the KFM will be receiving information about operations involving sums higher than 600,000 rubles (some US$20,000) registered in any and all financial entities, from banks to insurance companies to pawnbrokers. The KFM will be staffed by around 200 employees, 100 of whom will work in branches located in each of the country’s seven federal districts. Officials of the KFM will have the right to demand additional information concerning any “suspicious deals” (NTV.ru, November 5).

The main “plus” of Russia’s new agency is that it addresses the concerns of the West as articulated by the Financial Action Task Force (FATF), the anti-moneylaundering arm of the Organization for Economic Cooperation and Development (OECD). The FATF put Russia on its blacklist of “noncomplying” countries in the fight against moneylaundering last year. While the task force stopped short of imposing sanctions on Moscow this year, it refused to take Russia off the blacklist. Among the FATF’s criteria for judging a given country’s commitment to fight moneylaundering is whether it has an anti-moneylaundering agency (Moscow Times, November 2). International concern over moneylaundering has, of course, been heightened by the September 11 terrorist attacks in New York and Washington. The United States and its antiterrorism coalition partners have launched a campaign to track down money laundered by Osama bin Laden’s al-Qaida and other international terrorist groups. Indeed, in applauding Putin’s decree setting up the KFM, Mikhail Zadornov, deputy chairman of the State Duma’s committee on the budget and taxes, pointed to, among other things, the fact that it would facilitate the fight against financing for international terrorism (Strana.ru, November 5). According to Kudrin, KFM officials are scheduled to meet with an FATF delegation November 15-16 to brief it on plans for implementing Russia’s anti-moneylaundering law (AK&M, November 5).

At the same time, some observers fear that the KFM, like other agencies of control and law enforcement in Russia, will become corrupted and drawn into the frequent internecine battles between the country’s powerful business clans. In an apparent attempt to answer such worries, Kudrin said that “bank secrecy will not exist for the Committee, but information about clean deals will never go beyond its bounds” (Radio Ekho Moskvy, November 5). By way of further reassurance, Kudrin stressed Zubkov’s close personal relationship with Putin, saying that this was important for “the head of an organ that will be working with absolutely confidential information” (NTV.ru, November 5).

It is doubtful, however, that such reassurances will convince either those who note that the KFM’s access to confidential information will give the Kremlin a powerful financial/political lever or those who doubt that the president and/or members of his team are fully committed to equality before the law, a level playing field and one set of rules for all. The Izvestia.ru website, for example, noted that, according to Putin’s November 1 decree, the KFM is permitted to share the information it gathers only with the Prosecutor General’s Office, not with any other agency or office within the government or presidential administration. “Therefore, in theory, a political order to use the financial intelligence agency as a means of strong-armed pressure is out of the question,” the website noted sardonically. “Then again, who doesn’t know the independence of our Prosecutor General’s Office?” (Izvestia.ru, November 5). Likewise, average Russians are apparently suspicious about how the KFM will be used. Last week, a Moscow radio station cited a survey taken among Muscovites by the Gallup International polling agency. Twenty-four percent of the respondents predicted that the KFM would be used mainly to control funds belonging to the citizenry, 15 percent said it would be used to strengthen Russia’s financial security, and 13 percent said it would be used to improve the Russian economy’s image abroad (Radio Ekho Moskvy, November 3).