This is the second article devoted to the potential inclusion of the Russian Federation in the FATF Blacklist and recognition of Russia by the Government of the USA as a state sponsoring terrorism. Within this publication, we throw some light on the criteria and ground for the inclusion of a country in the FATF Blacklist, as well as the procedure and potential consequences of such countmeasure by FATF. To resync, the first article is available HERE and deals with more general aspects of the topic.



Subsection 1.1. General criteria for countries' compliance with the FATF requirements and practices

The following are general requirements and expectations of the FATF for the countries wishing to avoid being blacklisted. These include:

1. Requirements for the legal system (such as criminalization of money laundering and financing of terrorism, etc.)

  1. Criminalization of money laundering and financing of terrorism

  2. Confiscation, freezing and seizure of proceeds of crime

  3. Proper functioning of the financial control body and the law enforcement system

2. Measures aimed at preventing money laundering and financing of terrorism, which should be carried out by financial institutions, non-financial economic entities, as well as officials (such as proper customer and information storage control, etc.)

  1. Proper customer and information storage control
  2. Suspicious transaction and compliance reports

  3. Designation of a body authorized to impose sanctions for money laundering or financing of terrorism

  4. Sanctions should apply not only to legal entities and financial institutions, but also to their directors and members of the collective management bodies

  5. Sanctions should include the authority to impose disciplinary and financial penalties, the powers to suspend, revoke or cancel a license of the financial institution

3. Requirements for the system of counteraction of money laundering and financing of terrorism

4. Availability of a competent authority with the necessary powers, as well as adequate funding for its activities

5. Access to information on beneficial ownership and relationships of control

6. International cooperation

  1. Mutual legal assistance

  2. Countries should be able to provide the widest possible range of mutual legal assistance in investigations, prosecutions and related proceedings. Mutual legal assistance should include assistance of the following nature: (a) preparation, retrieval and seizure of information, documents or evidence (including financial records) from financial institutions or other natural persons or legal entities; (b) receipt of evidence or statements from individuals; (c) provision of originals or copies of relevant documents and records, as well as any other information and evidence; (d) service of procedural documents; (e) facilitating the voluntary appearance of persons for the purpose of providing information or testimony to the requesting country; and (f) identifying, freezing, seizing or confiscating assets legalized or intended for money laundering, proceeds of money laundering and assets used or intended for financing of terrorism; as well as instruments of such crimes and assets of the relevant value

  3. Mutual legal assistance should not be prohibited or burdened by unreasonable, disproportionate or excessively restrictive conditions9

  4. Existence of appropriate laws and procedures to ensure efficient and timely response to the requests for mutual legal assistance related to the identification, freezing, seizure or confiscation of: (a) laundered property, (b) proceeds from, (c) instruments used for, or (d) instruments intended to be used for money laundering and/or financing of terrorism

  5. Extradition

  6. Providing responses to international inquiries about non-profit organizations

7. Countries should sign and ratify or otherwise become parties to the Convention on the Financing of Terrorism and fully implement it. Countries must fully implement the UN Security Council resolutions on preventing and combating the financing of terrorism. These include the UN Security Council Resolutions S/RES/1267(1999) and S/RES/1373(2001). Relevant laws, regulations and measures must be adopted to comply with these Resolutions

8. Control over the national non-profit sector

9. Protection of the non-profit sector from its use for terrorist financing purposes through advocacy and effective oversight

10. Detection and elimination of terrorist abuses of non-profit organizations through effective investigations and information gathering

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9. Possible examples of such conditions (for w hich reasonableness, proportionality or limitation should be assessed) may include: general refusal to provide assistance on the grounds that legal proceedings have not been instituted in the requesting country; the possibility of requesting a formal conviction for the provision of legal assistance; excessively strict interpretation of the principles of reciprocity and double criminality.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.