Ministry of Finance of Ukraine disagrees with the decision of FATF not to blacklist russia

The Ukrainian Ministry of Finance disagrees with the decision of the Financial Action Taskforce (FATF) not to take further action against russia despite its growing violations of FATF standards.

Since russia’s suspension from the FATF in February 2023, it has intensified activities related to money laundering, terrorism and proliferation financing, and sanctions evasion. The Kremlin has deepened cooperation with FATF-blacklisted states: trading in arms and fuel with North Korea in breach of UN sanctions, and building stronger ties with Iran, selling fighter jets, buying drones to attack Ukraine and linking the two countries’ banking systems. The recent destruction of the Nova Kakhovka dam, the stationing of nuclear weapons in Belarus and the mining of the largest in Europe Zaporizhzhia nuclear power plant further demonstrate russia's growing risk to global security. Russia’s malign activity is carried out unashamedly and in full view of the world as a direct challenge to the established international order.

The FATF was aware of russia’s increased violations but decided not to blacklist the country at the plenary meetings held in Paris this week. The Ministry understands that it is difficult to reach a consensus across the FATF’s broad membership. However, there is a risk that this latest decision could embolden russia to undermine global financial security even further.

The Ukrainian Ministry of Finance and the Financial Monitoring Service of Ukraine have worked from the start of the full-scale invasion to highlight Russia’s non-compliance with FATF standards. We will continue engaging in dialogue with FATF and its members on the risks russia poses and work to achieve a stronger response.

Following the announcement of FATF’s decision, Sergii Marchenko, Finance Minister of Ukraine, said:

“Russia clearly meets the threshold to be blacklisted, and we disagree with the FATF’s decision not to include russia on the blacklist.  There must be a consolidated position of the international community to counter russia’s threat to the integrity of the global financial system and force the Kremlin to abandon its egregious violations of international norms and FATF standards. Every day we fail to act appropriately, we invite further chaos and destruction.”

Background information for editors:

The FATF is an intergovernmental organisation founded by the G7 to develop policies to combat money laundering, terrorism financing and proliferation financing.  Ukraine has made submissions ahead of the FATF Plenaries in June and October 2022, as well as before the February 2023 plenary. These efforts have resulted in FATF escalating the implementation of restrictive measures against Russia, culminating in its’ suspension from the organisation in February 2023 on the first anniversary of Russia’s illegal invasion of Ukraine.

In March and in April 2022, FATF issued a public statement and adopted the Declaration of the Ministers of the Financial Action Task Force declaring that the Russian military invasion of Ukraine ran counter to the FATF core principles aiming to promote security, safety and the integrity of the global financial system. FATF added that the invasion also represented a gross violation of the commitment to international cooperation and mutual respect upon which FATF Members had agreed to implement and support the FATF Standards.

In June 2022, FATF announced Russia could no longer hold any leadership or advisory roles or participate in decision-making on standard-setting, FATF peer review processes, governance, and membership matters. Additionally, the Russian Federation can no longer provide assessors, reviewers, or other experts for FATF peer-review processes.

In October 2022, FATF imposed additional restrictions on Russia, including barring Russia from all current and future projects and participating in meetings of FATF and its regional partner bodies.

In February 2023, in light of Russia’ continued reported arms trade with United Nations-sanctioned jurisdictions and Russia’s malicious cyber activity and the ongoing invasion of Ukraine, FATF announced its decision to suspend Russia’s membership. FATF recognised Russia’s actions were unacceptable and ran counter to the organisation’s core principles through Russia’s continued involvement in predicate offences.