President of Russia Vladimir Putin: Good afternoon, Mr Chikhanchin. Please.
Head of the Federal Service for Financial Monitoring Yury Chikhanchin: Good afternoon.
Mr President, I would like to brief you on preparations for the next report to FATF [Financial Action Task Force] and the results of our activities. In the first quarter of next year, we are to report to the international community on the efficiency of our legislation and the national anti-money laundering system.
We have done a great deal in this sphere, proving that cooperation with the mega regulator and law enforcement agencies can help enhance the financial institutions’ compliance with the law. You can see the figures on this slide. Based on this, we have taken measures to rule out some negative moments of special concern for the international community. These are the transfer of funds abroad, transit schemes and so on.
This is what we have done so far at this stage. To begin with, the law you have signed allows banks to reject requests for certain transactions, for example, they can refuse to open accounts for clients whom they do not consider to be law abiding. This year alone, there were 460,000 refusals, and we prevented 180 billion rubles from being transferred into the shadow economy. I would like you to know that we have received about a thousand complaints about the allegedly illegitimate reasons for denying these people’s requests. Such things do happen. We are working with Central Bank Governor Elvira Nabiullina to find mechanisms that would enable us to avoid such unfortunate mistakes.
As I have already said, there was a 2.5-fold drop in the number of …
Vladimir Putin: In the number of suspicious transactions.
Yury Chikhanchin: Yes. This is a very important development, since all suspicious transactions originating from our country become transparent for foreign banks. This suspicion has become a major factor.
I would like to say that the system we have launched at the Federal Service for Financial Monitoring together with the Central Bank shows that in 75 to 80 percent of cases data on banks whose licences were revoked coincide.
What are other areas where we have worked? And what other areas do we need to highlight? Of course, the first thing that should be mentioned is the creation of a mechanism for monitoring government spending.
Vladimir Putin: Related to public procurement?
Yury Chikhanchin: Yes, public procurement, and everything else. We started working with the taxation service, and prevented illegal VAT refunds for a total of 2.5 billion rubles.
As for loans, our data show that we were able to prevent the disbursement of 3.5 billion rubles to companies that failed to meet requirements. We shut off faulty contractors from public funds totalling 8.6 billion rubles.
I would like to emphasise that a number of criminal schemes have become a thing of the past. For example, it used to be that when a bank went bankrupt, a government contractor would suffer. But the removal of authorised banks solved this issue. Today we no longer have any loans to affiliated parties, etc. A number of measures were undertaken to this effect.
All in all, we were able to save the budget some 7 billion rubles under public procurement contracts alone.
Regarding the outcomes of the financial investigations, we carried out a number of them, and transferred to law enforcement agencies materials on illegal financial transactions totalling 67 billion rubles. In addition, 39 billion rubles in cash were seized, and 18 billion rubles were confiscated. All this was done in cooperation with law enforcement agencies, using our data.
Vladimir Putin: What about your relations with the law enforcement agencies?
Yury Chikhanchin: I believe we have very good relations with them, primarily with the FSB, the Interior Ministry, the Investigative Committee and the Prosecutor General’s Office.
I can tell you that we worked with the FSB to prevent the embezzlement of some 1.5 billion rubles at construction projects both in Crimea and the Tyva Republic. Our cooperation with the Federal Taxation Service has helped recover nearly 5 billion rubles and collect some 10 billion rubles in additional taxes. The Prosecutor General’s Office has initiated 13 criminal proceedings against various organisations based on our information.
I would like to say a few words about our efforts against the financing of terrorism, which is a topical subject. We have indeed found our place in this system. The main result is that we have launched an out-of-court system of seizing the assets of persons connected with terrorism. Thus far, we have seized about 6 billion rubles this year. This may look like a modest sum, but it is really quite substantial, considering that the preparation of the terrorist attack in St Petersburg cost 150,000 rubles and such terrorist attacks as in Paris, where the terrorists used knives and axes cost virtually nothing. We have managed to block the accounts and prevent specific actions.
Also, we have developed good relations with international partners, primarily with Central Asian states, on matters related to terrorism. We exchange information with them, and the assets of some 150 people have been frozen in Central Asia based on the information we provided. We have frozen the assets of approximately 100 people from these republics who are living in Russia.
We worked with the FSB and commercial banks to model a scheme of the terrorists’ financial actions. This has helped us to identify some 200 people and initiate criminal proceedings against them. In other words, banks have learned to identify terrorists based on this information. This is the main result.
I would like to tell you about one more project, which we are launching at FATF. Acting with your approval, we have established an international centre to train professionals for our system. Later we established a special body, the Institute of Financial and Economic Security at MEPhI, and then we involved eight other Russian universities, including the Sevastopol and Simferopol universities in Crimea, as well as the Rostov university in this project.
As of now, over 30 universities from Central Asian states have joined this networking project, which means that all of them have accepted a common tuition programme and standards. Our students start working in the third year. Foreign students, and we enrol about 200 of them, do not have to pay to study at our establishments. They defend their diplomas at our place in Moscow, but the procedure is streamed via video conference to their home countries. The heads of national banks, financial intelligence services and prosecutor general’s offices can see how their students defend their diplomas and so make decisions on their employment.