President of Russia Vladimir Putin: Mr Chikhanchin, the deadline for Russia to submit a national report on anti-money laundering activity is in October. Your department is in charge of preparing this report. Let’s start with that.
Head of the Federal Service for Financial Monitoring Yury Chikhanchin: Indeed, we must submit the Russian report to the FATF Secretariat for evaluation in October.
There are two sets of issues that will be covered in the report. The first includes the technical compliance of our regulatory framework with international standards, and the second is related to the effectiveness of the anti-money laundering system, that is, how well these laws are working. This is a very big issue.
The experts have until February to review the report. In February, a mission of about 12 people will come here. They will complete their mission sometime around March, and in October next year we will report to the plenary session. That is how the mechanism works.
With regard to our accomplishments to date, most importantly, we have drafted the National Counteraction System Concept (with regard to laundering of illegal proceeds and financing of terrorism). You signed it; thank you very much, this is an important document.
Also, in conjunction with the relevant bodies, we have compiled national risk assessments in the sphere of money laundering and combating the financing of terrorism and submitted them to the FATF Secretariat.
Based on these national risk assessments, five focus areas have been identified, including credit and finance, corruption-related areas, drug trafficking, illegal budget use, and the financing of terrorism. The departments have reviewed and agreed on all of this. The list of departments that work with us is long. We have also run these documents by various interdepartmental commissions, such as National Anti-Terrorism Committee, the State Anti-Drug Committee, and so on.
The most active role here was played by the commission that was established on your instructions to prepare a report and by the second interdepartmental working group on countering illegal financial transactions. We must continue its work. This working group has indeed done very much.
We can say that major amendments have been made to the legislative framework governing the activities of banks. For instance, the mechanisms allowing banks to reject a shady transaction. Significant amendments have been made to the Tax Code, and what Mishustin’s team [Mikhail Mishustin, Head of the Federal Taxation Service], with whom we are working, is doing, in particular monitoring cash registers, is within the competence of this commission. Plus, it is in charge of matters bearing directly on the budget.
The most serious subject that we are reviewing is using the judicial system to take money abroad. We have managed to prevent the withdrawal of about 50 billion rubles owing to cooperation with Lebedev’s team [Vyacheslav Lebedev, President of the Supreme Court]. We went to court to confirm that money is bogus.
What we need to do today to conclude our analysis is to upgrade a number of regulatory acts, adjust statistics at the interdepartmental level, prepare examples for experts to look at, step up this work and continue it at international venues.
I must say that we are very actively working with all ministries and departments and members of the delegations that attend these forums. There are a number of areas where we are supported by the international community, in particular, our projects on countering the financing of terrorism and identifying terrorists and militants. Over a hundred countries are working with us on these projects. More than a hundred countries and one international organisation – the United Nations Office on Drugs and Crime (UNODC) – are working with us to combat drugs. We have also launched a very big project to identify professional international launderers.
Vladimir Putin: “Milky Way”?
Yury Chikhanchin: Yes.
We are working very closely in a four-nation group – Iran, Iraq, Syria and Russia – on exchanging information in all of these areas.
We have initiated a so-called technical assistance programme. This is our International and Methodology Centre for Financial Monitoring and the network AML/CFT Institute. It was presented to the Financial Action Task Force (FATF) as an educational institution that provides assistance in the training of specialists. Here is a map and you can see what countries use it.
This year alone we have trained about 2,000 specialists from Russian government bodies, and 14,000 from the private sector – banking services, leasing, etc. Specialists from 32 countries, including Latin American and Central European countries, came to us. The last visit was from Japan.
In all, we have trained about 3,000 students both in person and via teleconference.
We are doing the same in our network institute. We established it five years ago per your instructions in cooperation with the Ministry of Education and Science and the Federal Agency for Scientific Organisations. It basically unites 36 universities around the world – ours, Central Asian, Chinese and the BRICS countries. Today, 2,600 students study at this institute, including over 300 foreigners.
This approach is very interesting. I have told you about it, so I am repeating myself. Foreign students defend their thesis at our institute, while their potential employers (a representative from the central bank or the prosecutor’s office in a foreign country) listen via teleconference as their students do this.
This year we organised thesis reviews on a national scale where the students can defend their projects at one institute and can be seen by all the universities in the network. They see how the defence is going, what methods and information resources are being used, and how well students are prepared. This is very interesting and we continue to develop this approach.
Now we would like to establish a structural unit, a kind of a secretariat in cooperation with our industrial partners, banks and large corporations that employ the institute’s graduates because before, everything rested on us. If this is approved, we will establish a small autonomous non-profit organisation.
We have now included science: over five academic institutes are working with us.
This is basically how the reports are being prepared.
Vladimir Putin: When you described the court related problems, I understood that the Supreme Court supported and helped you.
Yury Chikhanchin: Yes, very much so. We have conducted, with their help, several seminars, conferences and meetings. Because of this we have managed to prevent an attempt to send money abroad based on court decisions.
Vladimir Putin: Thank you.