Russia Reacts Quickly To FATF Blacklist

by Tatiana Smolensky, Tax-News.com, Moscow

26 June 2001

Spurred into action by the threat of sanctions, Russian legislators have ironed out most of the disagreements on a money laundering bill, in order to improve its chances of being passed before the September 30th deadline imposed by the Financial Action Task Force.

Lawmakers working with President Vladimir Putin's team to resolve disputes over the controversial bill have agreed to remove tax evasion from a list of crimes tied to money laundering, which has always been a sticky issue because millions of Russians and companies don't declare their true income in order to avoid paying taxes.

The government has also agreed to provide guidance on the types of transactions that banks must report, instead of requiring notification of all large money movements, according to Alexander Shokin, the chairman of the banking committee in the lower house. 'These changes can be considered agreed,' said Mr Shokhin recently, although he made it clear that they had not yet been examined by the big man himself, adding that: 'The law is so controversial that a 100 percent guarantee they will be passed can be given by one man only, and...that's not God, but President Putin.'

Mr Shokhin, a former economy minister, met with FATF officials early last week to explain the legislation. Not that it did him a great deal of good. The lack of recognition of the efforts that have been made has stung some, and Yuriy Zubarev, press secretary at the Russian Embassy in Washington responded angrily to the announcement on Friday, reasoning that the forthcoming bill and the establishment of a task force formed to monitor financial activity should have been taken into account by the FATF. 'If that's not progress, what is it?' he asked angrily. 'It would be incorrect to say that Russia is not making any progress.'

However, Alexander Shokhin remains optimistic that the country is heading in the right direction, and is confident that the proposed measures will ensure the country's ultimate removal from the blacklist. 'It seems that the passage of the law plus organizational steps will be considered as enough,' he observed, 'Although monitoring will be continued.'

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