Publication: Monitor Volume: 7 Issue: 150

Russia will apparently not be among those countries the international community has targeted for tough financial sanctions for not cooperating in the fight against money laundering. According to the Russian state news agency RIA Novosti, the Organization for Economic Cooperation and Development (OECD) has decided that Russia has created the proper conditions for fighting money laundering. The OECD’s Financial Action Task Force (FATF), which was set up in 1989 to combat money laundering, is due in November to publish its new list of countries deemed in violation of international norms and standards for financial activity. Guatemala, Burma, Egypt and a number of Pacific Ocean island nations are among those expected to be on the blacklist, and may be targeted for tough sanctions, including limitations on international credits (, August 3).

Before going into recess last month, Russia’s State Duma passed an anti-moneylaundering law–a move many observers saw as aimed primarily at getting Russia off the FATF’s list of noncomplying countries in the fight against money laundering and avoiding potential sanctions. It was not the first anti-moneylaundering law the Duma has considered. In early 1998, then President Yeltsin vetoed anti-moneylaundering legislation passed by the parliament, citing the alleged unconstitutionality of requiring financial institutions to report suspicious transactions. The law passed last month was more palatable to Russia’s business community because it does not include in its definition of money laundering those funds received through the violation of tax or currency laws (see the Monitor, July 16). In another step that may have been aimed at creating a favorable impression on the FATF and the international community in general, the Prosecutor General’s Office announced last week that it had handed over to a court the case involving the former leadership of the State Statistics Committee. In June 1998, the committee’s chief, Yury Yurkov, and several of his deputies were arrested on charges that they had falsified economic data on the output of certain companies in order to lower those companies’ tax liabilities, and that they had sold secret information about some companies to rival firms (Moscow Times, August 3).

Meanwhile, a Russian newspaper quoted the Australian Transaction Reports and Analysis Center (AUSTRAC), the Australian government’s anti-moneylaundering body, as saying that US$205 billion from Russia has been laundered through banks on the Micronesian island of Nauru over the last decade. According to the paper, a significant chunk of this money passed through a Nauru-registered bank called Sinex, which is reportedly under the control of Semyon Mogilevich, the reputed Russian mafia boss (Obshchaya Gazeta, August 2). In 1999, various media tied Mogilevich to the Bank of New York money laundering scandal (see the Monitor, August 24, 26-27, 31, 1999, August 7, 2000).