President of Russia Vladimir Putin: Mr Chikhanchin, let’s start with the agency’s results for 2014. I then want to discuss with you a matter concerning preparations for the capital amnesty. I know that your agency is involved in this work too. Then of course there is also the matter of your international activity, given that financial intelligence works in close contact with its partners throughout the world.
Please, go ahead.
Director of the Federal Service for Financial Monitoring Yury Chikhanchin: Thank you very much, Mr President.
We met recently to sum up the year’s results. Representatives of the relevant ministries and agencies were present at the meeting. I want to tell you about some of the results. We think that the decision to create a mega-regulator headed by the Central Bank was a very good decision that has enabled us, working together, to clean up substantially our financial institutions in general and not just the banks.
Let me give you a few figures. The number of operations that involve sending capital abroad through dubious operations has fallen by nearly half. Operations to unofficially convert capital into cash have also fallen by around 1,500-fold.
The law enforcement agencies are taking greater interest in our information now. Overall, we have conducted close to 40,000 financial investigations and the law enforcement agencies have used our information to open around 1,500 criminal cases, with 300 of them having already gone directly to the courts.
We have made progress in the fight against financing terrorism and think that the 62 criminal cases opened for such activity is a big result. This is one aspect of our work. Also, a mechanism is now in place for freezing terrorists’ assets. We froze around 3,500 accounts belonging to people connected to terrorist activity and on the list of individuals with connections to terrorism and extremism.
Going over the resulting joint figures for the year, we prevented losses to the state totalling 300 billion rubles (we have the documents to confirm this), assets recovered came to a total 265 billion rubles, property worth slightly more than 3 billion rubles was confiscated, and 16 billion rubles in taxes were paid in addition or returned. These figures show that we really are now making headway in our results.
Over the last year, we liquidated 15 large shadow markets that were responsible for processing around 90 billion rubles. True, we face a problem in that part of this shadow money is now going to other markets. Law No. 134, which you supported, has provisions allowing banks to suspend dubious operations. We used this to suspend operations involving 137 billion rubles, thus preventing this money from going into the shadows.
We are now looking together with the Central Bank at where the financial flows have gone. There is no question that they are heading into the securities market. Unfortunately, around half the operations in this area are dubious in nature, and this is a very serious issue.
Insurance companies are another area of concern. The problem here is that if we revoke insurance companies’ licences, especially those working in medical insurance, we could leave people without access to medical care. We are therefore taking great care here and monitoring the situation to make sure that such problems do not arise. It is the same situation with pension funds, especially those that are working with funds provided through the maternity capital scheme.
The precious metals sector has come to our attention increasingly of late. There are problems in this sector too, matters that require regulation. This is one of our tasks over the coming period.
In accordance with your instruction, we are working actively with state contracts, as I reported earlier. Unfortunately, we see that slightly more than 500 contracts or around a third of the total, are connected to offshore companies, the founders of which are abroad. We are currently working on provisions that will prohibit this.
As instructed, we are working on the state defence procurement programme too and will have regulatory documents in this area ready by the end of the month, working together with the Defence Ministry and Finance Ministry. The final revisions are underway now and the documents are already with the Presidential Executive Office.
Let me say a few words about the amnesty on capital. We are certainly closely involved in the preparations, as such amnesties in any country, including in Russia, take place under the strict supervision of FATF [Financial Action Task Force on Money Laundering]. Any deviations here could put us at risk of sanctions, and so it is important to do things right.
Very soon, at the end of this month, the chairman of the relevant Council of Europe committee will visit at our invitation to hold a round table and tell us about how amnesties have been carried out in other countries and the problems encountered.
In this respect, Russian citizens should not wait for the amnesty, I think, but should simply return their capital. The ‘lucky letters’ that Russian residents with accounts in Britain received, for example, are simply a signal that all Russians with accounts there are being asked to explain where their money came from. If they try to stall this whole process…
Vladimir Putin: You mean, they could look for pretexts that our partners could use to prevent the return of these financial resources to Russian jurisdiction?
Yury Chikhanchin: Yes, they could conduct a financial investigation or open a criminal case, for example, and this would essentially make it impossible to return the money as we hope. In other words, this is all related to the amnesty, and this is why we are working so closely and intensively now.
I want to say a few words about international forums. First there is the BRICS group. Russia currently holds the BRICS presidency and will host the group’s summit this summer, and so we are working through various international forums to build cooperation mechanisms with our colleagues – the heads of financial intelligence services and the heads of delegations at these international meetings. We have had two meetings now and have found some common ground. One such area is related to the creation of the BRICS Bank, ensuring cleanness and transparency of clients, expenses and so forth.
Another area is working out concrete common approaches for evaluating these countries. We will hold a seminar for these countries soon, in late April.
Another area of work, as I reported earlier, is that we have established a network organisation encompassing 15 Russian universities and a dozen-odd foreign universities all following the same approach on prevention of money laundering. We signed an agreement in this area at our last meeting with the association of the BRICS institutions.
A number of countries, especially Brazil and South Africa, have expressed the desire to have their teachers and students come here to work together on common methods and standards. We will therefore continue our work in this area.
Vladimir Putin: Good.