Russian oligarchs the ‘most sophisticated in the world’ at dodging KYC and evading sanctions

THE CAPACITY OF Russian oligarchs to work around rigorous KYC rules and international sanctions is the strongest in the world, a former FATF President has warned.

Their methods were so capable that their identity may remain hidden even if a financial institution makes every effort to root out accurate beneficial ownership information, he suggested.

In the same speech, he also hit out at the Russian FIU Rosfinmonitoring claiming that it was “firmly under the control” of the country’s Federal Security Service (FSB) and headed by a sixteen-year veteran of the Soviet KGB.

Billingslea believes the FIU allows state-sponsored money-laundering schemes and is a key part of the State apparatus that enables President Vladimir Putin’s grip on power.

“It was no surprise to see in the weeks after the arrest of Alexei Navalny, that Rosfinmonitoring declared the network of that opposition leader to be a terrorist network,” he said.

Marshall Billingslea served as President of the Financial Action Task Force from 2018 to 2019 and Assistant Secretary for Terrorist Financing in the United States Treasury.

Speaking at an ACAMS virtual conference on Russia’s FinCrime threat to the Nordics, Billingslea said that Oligarchs in Russia were facing a “dual threat” to their work.

One threat came from within Russia and President Vladimir Putin’s government, the other came from outside Russia – chiefly the Joe Biden administration in the United States.

These were factors that have led oligarchs towards developing “I think probably the most sophisticated KYC and sanctions evasion schemes in the world,” he said.

He described many of these businesspeople as individuals “who have literally killed, extorted or otherwise coerced their way into control over key economic and extractive sectors.”

“Many come directly out of the KGB, or relationships have developed via various organised crime groups, mostly out of St Petersburg.”

The areas they did business ranged from the illegal sale of natural resources, extortion, theft, cybercrime as well as drug and tobacco smuggling.

But despite all this, he acknowledged that “only a handful” of them are on a US sanctions list, while almost none were on UK or EU sanctions lists.

“Russian Oligarchs are generally not listed on EU or OFAC lists unless their behaviour is so reprehensible that they need to be cut off from the global financial system,” he explained.

This had the knock-on effect that banks would not know of certain clients’ bad behaviour “until Treasury acts”.

“You certainly will not know this if all you do is basic screening,” of sanctions lists, he warned.

His comments come amid continuing Western frustration and hesitancy around Russia – not just the actions of Oligarchs but also the political agenda of Putin himself.

More recent actions such as the massing of troops on the Ukraine border, a Russian crime gang’s cyber hack of Ireland’s health system, and the detention of oppositions Alexei Navalny have led Billingslea to agree that the country acts in ways that are completely unacceptable.

Furthermore, it was his personal opinion that even though the Biden administration initially showed renewed promise being “aggressive” against the country’s corruption and FinCrime threats, that seemed less likely now.

The jailing of Navalny without a response, as well as the decision to waive sanctions on the company behind the Nord Stream 2 pipeline were factors, he said.

“The fact of the matter is that Russian bad behaviour has not stopped. It took a turn when Putin decided to mass more military forces.”

Meanwhile, “many of the other oligarchs who have not been designated have taken massive steps to conceal their wealth and property ownership.”

Article credit: https://amlintelligence.com/2021/05/russian-oligarchs-the-most-sophisticated-in-the-world-at-dodging-kyc-and-evading-sanctions-former-fatf-chief/