Duma Finally Reaches Agreement On Money Laundering Bill

by Tatiana Smolensky, Tax-News.com, Moscow

06 July 2001

It was announced on Wednesday that the Russian Parliament has finally approved new legislation to crack down on money laundering on its second reading. Following the damning report by the FATF on the state of the country's legislation, and the threat of sanctions if controls were not in place by September 30th, the Duma was briefly stung into action, but the bill fell at the first hurdle, when deputies criticised it for being too vaguely worded and open to misinterpretation.

'The law needs to be a direct action law, where absolutely everything, from A to Z, is spelled out in every detail,' complained Nikolay Kovalev, the head of the State Duma Commission on Combatting Crime, at the time. Presumably, however, Mr Kovalev's fears have been calmed by the revised draft submitted by the government this week, which increased the threshold of suspicious transactions that could come under scrutiny from Rbs500,000 (approximately $17,150) to Rbs600,000, and reduced the penalties for banks which failed to report such transactions.

Alexei Kudrin, the Russian Finance Minister said that he was pleased with the new draft law, and felt that as well as helping the country to meet the demands set by the FATF, it would improve Russia's international standing. With a round of meetings with government ministers from leading industrialised countries coming up, and the Duma due to break for summer next month, the approval of the bill has not come a moment too soon.

'I am very happy, this is the best possible version,' said the vice chairman of the committee on banking and financial markets. 'The risk was that the law would not have met its claimed objectives, but have been used for clandestine objectives.'

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