What is Financial Action Task Force and why Russia could get blacklisted soon

Established in 1989 by the Group of Seven (G7), The Financial Action Task Force (FATF) is an international organization to combat money laundering with a wide mandate including combating terrorism, financing and other threats to the global financial system. The FATF sets global standards and policies to promote legal, regulatory, and operational measures that countries can implement to strengthen the integrity of their financial systems. Russian war in Ukraine and destructive actions worldwide could end up with getting it into the FATF blacklist. 

According to DW agency, Ukraine insists on including Russia on the FATF list of countries that pose the highest risk in terms of money laundering and terrorist financing, alongside with Iran, North Korea and Myanmar. At the begining of this summer, the Minister of Finance, Sergii Marchenko argued that Russia’s blatant violations have been on display for everyone to see:

„The Kremlin has been intensifying military and economic ties with North Korea and Iran, financing terrorist organisations inside and outside Russia, weakening anti-money laundering institutions and sponsoring rampant cyber-crime. FATF has one clear way to counter these violations and provide protection to the global financial system – by blacklisting Russia.”

According to Politico publication, Ukraine pointed to the financing by the Russian state of private military companies such as PMC Wagner and the connection of the latter with illegal activities (in Central Africa and Moldova — ed. n.) — the role of cryptocurrencies and various Telegram channels in financing terrorism and laundering ‘money obtained from goods stolen during the invasion of Ukraine — from grain to minerals’.

Key functions of FATF include also evaluating compliance and identifying high-risk jurisdictions. The FATF’s „grey list“ and „blacklist“ are well-known tools it uses to designate jurisdictions with deficiencies in their AML/CTF systems, signaling to member states and financial institutions to apply enhanced due diligence measures. 

The last FATF decissions outline the Russian aggression against Ukraine as unacceptable. In 2023, amid Russia's ongoing invasion of Ukraine, FATF suspended Russia's membership but has not yet downgraded its rating. Publicly, the organisation has stated that it considers Russia's aggression unacceptable and contrary to its core principles, but in practice, downgrading Russia's rating requires consensus from its diverse membership, the publication explains.

Three times a year, about 40 FATF member countries, including China, India, Brazil, South Africa and Saudi Arabia, which a number of observers consider friendly to Russia, meet to determine which states should be placed on the black and grey lists and which should be removed from them. 

The Ukrinform news agency noted that Russia has also intensified cooperation with Iran – a globally sanctioned and FATF-blacklisted state. The Kremlin has provided Tehran with a backdoor to access the international financial system by interlinking payment systems to bypass SWIFT sanctions and opening state VTB bank branches in Iran. Russia has also been heavily reliant on Iranian drones to maintain its illegal invasion in Ukraine. 

Russia has been a permanent member of the FATF organisation since June 2003. According to Politico, Ukraine first requested Russia's inclusion as a high-risk jurisdiction in April 2022 and has since then continually — albeit unsuccessfully — presented new evidence to get Moscow downgraded. In June 2022, however, Russia was banned from fulfilling leadership and advisory roles at the FATF. On October 22, 2024 the FATF is scheduled to meet on to discuss new potential additions to its list of monitored countries.