By Stephen Rae
AML Intelligence Chair and Co-Founder
IT’S been flagged on AML Intelligence over the last few months. And yesterday, the EU finally confirmed it’s adding Russia to its own financial services blacklist.
The move – considered unthinkable by European Commission officials at the start of the year – marks a pivotal moment in the Union’s AFC efforts.
Significantly, there is now a deliberate divergence from Financial Action Task Force (FATF)’s list of high risk third countries – the so-called ‘grey list’.
From Europe’s perspective the move to blacklist Russia is long overdue. As MEPs on Monday outlined to AMLA Chair Bruna Szego, Russia is at the heart of global organised crime. Moreover, the Kremlin has accelerated its money laundering and terrorist financing matrix since the Ukraine invasion, becoming a full blown threat to global finance.
FATF, whose members include Kremlin allies, was unable to ‘grey list’ Russia – but effectively did so by suspending the country as a member.
Europe on the other hand has finally done what it should have done three years ago and blacklisted Russia in the financial services world.
It’s abundantly clear a majority in the European Parliament now want the European Commission to introduce its own list of high risk third countries – independent of FATF. One of the parliament’s most influential lawmakers this week described how FATF “proved toothless” on Russia.
FATF and EU lists
The feelings are understandable.
At the same time, MEPs must be careful what they wish for.
FATF has done incredible work in challenging circumstances over the last several decades. It’s brought rules and risk-based AML/CFT regimes to every corner of the globe. Presidents such as Marcus Pleyer and Elisa de Anda Madrazo and the Secretariat led by Violaine Clerc have built tangible systems that benefit citizens globally. And FATF still has much work to do.
This is not a zero sum game. FATF and the EU list can stand side by side – it’s not an either-or scenario.
But it is a precedent – and MEPs will now clamour for more countries to be added to the Union’s list.
FATF too has work to do – to engage with stakeholders like MEPs and address their concerns about its mission.
The work the inter-governmental agency does is too valuable to be undermined – particularly in the geo-political dynamics the world faces now. If anything, we probably need FATF more than ever before.
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