In April, the State Duma ratified the Strasbourg Convention, which facilitates the recovery of laundered money from foreign financial institutions and thus Russia’s participation in money laundering investigations launched by other governments. Last month, the Duma passed in its first reading an anti-moneylaundering bill that would create a new agency to monitor financial transactions–the equivalent to the “financial intelligence unit” mentioned in the FATF report. This new agency would monitor, among other things, suspicious cash transactions and real estate deals.
The draft bill is a watered-down version of one sponsored in 1999 by Viktor Ilyukhin, the Communist deputy who then headed the Duma’s security committee, which was vetoed by President Boris Yeltsin that same year. President Vladimir Putin reintroduced the Ilyukhin-sponsored measure last year after Russia was again included on the FATF’s black list. While the new draft is supported by influential legislators such as Alexander Gurov, the current head of the Duma’s security committee and a leading member of the pro-Putin Unity party, it is opposed in its current form by both the Association of Russian Banks and by the Union of Right-Wing Forces (SPS). The Kremlin reportedly had hoped that the new anti-moneylaundering bill would be passed and signed into law before the FATF published its new black list. This, however, did not happen: Part of the problem reportedly involves interagency competition between Russia’s Finance Ministry, Interior Ministry and tax services over who will control the proposed money laundering monitoring agency. The draft legislation is scheduled to come up for a second reading next week, and Putin reportedly wants it passed before next month’s meeting of the G-7 countries in Genoa, Italy. If it does not pass, Russia is likely to remain on the FATF’s black list and could eventually face unspecified sanctions (Vedomosti, June 22; Moscow Times, May 25).
Russia, of course, achieved money laundering notoriety last year with allegations that billions of dollars in Russian money were laundered through the Bank of New York. It has also received unwanted attention over the case of Pavel Borodin, the Russia-Belarus state secretary and former Kremlin property manager who was detained in Washington at the start of this year at the request of Swiss authorities, who were investigating him for alleged money laundering in connection with the so-called Mabetex case. Borodin eventually agreed to go to Switzerland to face questioning over the charges, after which the Swiss authorities agreed to release him on US$3 million bail. After returning to Russia, Borodin voluntarily traveled to Switzerland twice–most recently, earlier this month–to face Swiss interrogators over the Mabetex charges, but refused to answer any of their questions (Moscow Times, June 14; see also the Monitor, May 18).
In another case, Germany prosecutors at the start of this year reportedly launched a probe into allegations that up to US$7.2 billion from Russia were laundered through banks in Germany and neighboring countries. Subsequent reports in the German and Russian media identified the TransWorld Group (TWG), the London-based company that once was a major player in Russia’s aluminum market, as being at the heart of the German investigation (Moscow Times, January 17). Meanwhile, this week, the biweekly newspaper Novaya Gazeta published a note apologizing for a series of articles it published in 1999 alleging, among other things, that offshore firms connected to former TWG president Lev Chorny had been used to launder “dirty” money. The paper said these and other charges leveled against Chorny and TWG in the articles had not been substantiated (Novaya Gazeta, June 21).
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