Russian watchdog spots $152bn of suspicious transactions in 2015

By bne IntelliNews February 9, 2016

"Suspicious" financial transactions worth a total RUB11.7 trillion ($152bn) were noted by Russia's Rosfinmonitoring financial watchdog in 2015, TASS reported on February 8.

Parallel to the ongoing banking sector clean-up by the Central Bank of Russia (CBR), criminal cases related to money laundering that went to court last year increased by 18.3% y/y to 627 cases in 2015, according to the Russian Interior Ministry.

While the volume of suspicious transactions possibly linked to money laundering remained almost flat compared with 2014, it decreased notably from RUB16.2 trillion ($210bn) seen in 2013, Rosfinmonitoring said.

Of the total amount of shady transactions, about RUB1.5 trillion ($19bn) left Russia in suspicious banking operations, down from RUB2.5trillion in 2013.

In November 2015, Russian law enforcement agencies detained the alleged mastermind of a money laundering syndicate of 60 banks and 500 people said to be responsible for channelling some $46bn out of the country, the largest laundering case yet.

The scheme was reportedly run by a Russian businessman and former vice president of the Moscow Boxing Federation and co-owner of several bankrupt banks. Officials said it could have involved Moldovan, Lithuanian, and Estonian banks servicing Russian and offshore shell firms that channelled money out of Russia under the pretence of issuing compensation for fake trade deals with local nationals.

In another high-profile case, Deutsche Bank said in September last year that it was closing its investment bank in Russia following money laundering allegations.

Deutsche Bank said it had discovered abuses of internal policies during its investigation into mirror trading, which may have enabled Russian clients to shift money offshore without alerting the relevant authorities.

Meanwhile, only 15% of Russian businessmen disclose information about their foreign assetsVedomosti daily reported on February 8, citing the Federal Tax Service in Moscow. 

The low numbers deal another blow to Kremlin-initiated efforts to bring the earnings of citizens to or back to Russia as the government struggles to balance the 2016 budget and stimulate the economy after 18 months of sanctions and falling oil prices.

However, Russian authorities might now be assisted by foreign financial institutions.  Switzerland's UBS Bank is verifying that its Russian clients are complying with recently passed Russian "deoffshorisation" legislation and observing conditions of registering a Controlled Foreign Company (CFC), Vedomosti daily reported on February 9, citing an unnamed banking source.

Reportedly, UBS managers are instructing clients to provide CFC registration to Russian authorities and an official procedure to do this will be introduced in the near future.

Since the beginning of 2016, Credit Suisse and the Swiss division of Rothschild Group have been demanding evidence that Russian clients are not under scrutiny from local watchdogs and taxmen, while several other unnamed banks are preparing to do the same.

Starting from 2016, disclosing CFC compliance might become obligatory in the UK and the Netherlands, should such legislation be passed, Anna Voronkova, a partner in Amsterdam-based auditor KPMG, told Vedomosti .

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