Russia’s rating concerning the FATF recommendations on the virtual assets market has been downgraded to “Partial Compliance.” This is evidenced by a report from the EAG.
According to the document, the jurisdiction is taking insufficient measures in the legislative regulation of virtual currency circulation. Experts specifically mentioned the absence of a definition for providers of cryptocurrency-related services. In other words, it is unclear who can operate crypto exchanges and exchangers in Russia.
The EAG also highlighted a contradiction in the law “On Digital Financial Assets.” The regulatory act does not explicitly prohibit individuals from becoming providers of DFA services. However, based on the definitions of token issuers and exchange operators, only legal entities can fulfill these roles.
Furthermore, the law recognizes cryptocurrencies as “property” for AML/CFT purposes. But since the list of cryptocurrency service providers is undefined, compliance with anti-money laundering legislation and accountability in this area is impossible.
Meanwhile, Russia’s rating was upgraded to “Significant Compliance” on three FATF recommendations:
- financial sanctions related to terrorism and terrorist financing;
- financial sanctions related to the proliferation of weapons of mass destruction;
- transparency and beneficial ownership of legal entities.
The organization particularly praised the mechanism established in Russia for the immediate freezing (within 24 hours) of assets of individuals and legal entities based on UN Security Council sanction lists.
The previous assessment of Russia’s anti-money laundering system by FATF was conducted in October 2019. The new rating was approved at the organization’s plenary session, which concluded on February 23, 2024.
During the session, FATF once again confirmed the potential risks posed by Russia to the international financial system, considering the country’s growing ties with North Korea and Iran. The organization extended the suspension of Russia’s membership but refrained from placing it on the blacklist.
Back in December 2023, Rosfinmonitoring warned that FATF might downgrade Russia’s rating due to cryptocurrencies.