Russia's financial watchdog Rosfinmonitoring is in for a squeeze as the country draws close to possible blacklisting by the Financial Action Task Force (FATF). The plenary session scheduled for October 21-25, will consider Russia's anti-money laundering measures, among other areas, how the country handles regulation on virtual currencies. Despite efforts to enhance compliance, concerns remain about the country's digital currency framework.
Rosfinmonitoring also emphasized the fact that the existing system works well. The agency responded to the criticism of digital currencies recalling that in the recent past, legislations aimed at better oversight were adopted by federal legislatures. The said legislation addresses the former concerns raised by FATF regarding low levels of regulation. The regulator continues insisting nothing negative and significant enough is problematic to blacklist.
As reported by TASS, a Russian news agency, responding to the matter, Rosfinmonitoring said, "The Russian Federation's rating for three FATF recommendations was raised, and only for one was it lowered to the level of 'Partial Compliance' (due to insufficient legislative regulation of the sphere of circulation of virtual currencies). It further noted that since then, "two federal laws regulating the circulation of digital currencies have already been adopted."
The FATF is an intergovernmental body that establishes global anti-money laundering and anti-terrorist financing standards. It continually reviews its member states for proper compliance with the norms established. Inclusion in the blacklist by the FATF for Russia's existing issue may have very severe repercussions, well cutting off its connection with the financial systems of the international arena and, thus, further isolating it from the world markets.
Despite the pressure, Rosfinmonitoring insists that its anti-money laundering measures have no "strategic shortcomings." The regulator stressed that these shortcomings are usually a requirement for inclusion on FATF's blacklist. It remains positive concerning efforts the country is making to further strengthen its financial system, especially in the regulation of digital currency.
The inclusion of Russia in the FATF blacklist would mark a significant setback for a country whose struggling economy is under heavy international sanctions. The heightened scrutiny of its financial practices comes at a time when the country is trying to update its approach to digital currencies and strive for stability in the financial system.
The plenary session of the FATF, set for October 21-25 will decide if these measures have been enough or if the international organization finds Russia's anti-money laundering framework to be unsatisfying. Meanwhile, Rosfinmonitoring is the opposite, being confident that strengthened regulations will keep Russia away from financial isolation further.