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In a move that could be seen as hesitancy, the anti-money laundering (AML) organisation has demoted Russia but retained it as a member.
The Financial Action Task Force (FATF) has issued a statement severely limiting “the Russian Federation’s role and influence” within the organisation.
In the statement, FATF went on to say that Russia can “no longer hold any leadership or advisory roles or take part in decision-making on standard-setting, FATF peer review processes, governance and membership matters".
Russia can also “no longer provide assessors, reviewers or other experts for FATF peer-review processes”.
The action against Russia comes more than 100 days since the start of the Ukraine conflict and several months after FATF initially deplored the invasion of Ukraine but did nothing about it.
In a written response to VIXIO, FATF said its “decision making body, the FATF Plenary, meets three times per year. Decisions at Plenary are made by delegates from FATF members. The decision regarding Ukraine was made at the June Plenary.”
However, it is worth noting that the previous FATF Plenary concluded on March 6, 12 days after Russia’s invasion of Ukraine, which suggests FATF was not ready to demote Russia’s within the organisation at that time.
In its latest statement, FATF balances Russia’s “gross violation” to international cooperation with the country’s largely supportive role against money laundering (ML), saying: “The FATF recognises the role the Russian Federation has played in the development of the Global Network in the Eurasian region since the Russian Federation joined the FATF in 2003.”
Indeed, earlier analysis by VIXIO has shown that Russia maintains a robust level of ML, with analysis of compliance scores from FATF’s own fourth round consolidated assessment ratings showing Russia as the 22nd most compliant country out of the 125 assessed jurisdictions.
This is higher than the United States at 26th place, as well as many European countries, including recently de-greylisted Malta.
Russia also has more than 80 percent of all FATF recommendations listed as largely or fully compliant, with no current record of non-compliance, unlike the US, which has 8 percent non-compliance.
Changing of the guard
Germany, which currently leads the FATF presidency, has generally taken a more cautious approach to its response to Russia's invasion compared with other allies.
For example, Germany has garnered a reputation in the past few months for holding up decisions to sanction Russia on numerous occasions, including blocking sanctions in February, stalling a Swift ban in March and sanctions on oil in April.
VIXIO’s Russia sanctions tracker has also seen evidence of German hesitance, with the German Bundestag passing its first sanctions enforcement act in late May, compared with multiple earlier updates from countries such as the UK or the Netherlands.
From July 1, Singapore will be taking over the FATF presidency, with new priorities. These will include strengthening asset recovery and international cooperation against cross-border financial crime and using data analytics and public-private partnerships to combat ML.
FATF has said it will publish its full priorities under its Singapore presidency on July 1.
UPDATE: June 22 (3pm) - This article has been amended to reflect comment VIXIO received from FATF.
