A FATF report revealed that the nations’ regulatory system of virtual assets and cryptocurrencies is unsatisfactory, hence, resulted in a lower compliance rating.
In response to German Neglyad – the Russian Foreign Transaction Assessment – during the plenary session on February 23rd, a report by Vedomosti elaborate that the Russian rating was kept international according to the FATF standard, said Vedomosti.
An intergovernmental body, FATF is a center of providing standards to the nations and trying to effectively implement legislative, regulatory and operating measures for mitigating money laundering, terrorist financing, and related threats to the financial system’s integrity. The organization carries on regular checks and balances processes of its members states compliance with these standards consequently ensuring compliance are at par with regulations.
Russia FATF Rating: Crypto Regulation Costs Moscow
Neglyad reported that after conducting an analysis, the Eurasian Group on Combating Money Laundering and the Financing of Terrorism (EAG) made the decision to downgrade their status.
Neglyad stated that the EAG, as a member of the FATF organization, received approval for its evaluations from the global authority.
A report was generated by the authorities assessing the level of technical adherence to the nation’s anti-money laundering protocols.
Moscow Set to Respond with New Regulations?
Moscow will be disappointed by the recent news from Russia regarding FATF. America this year emerged as FATF’s first country to be awarded its highest compliance rating after the successful completion of In-depth review in 2019.
FATF presents guidelines needed to run and counteract dubious transactions related to crypto assets and cryptocurrency.
The latest auditors’ report indicates that Russia moved from being compliant to being partially compliant.
The director of Rosfinmonitoring puts much accent on monitoring the process of crypto exchanges’ work in Moscow.
He mentioned that the government must align itself with local financial institutions.
Russian ‘Steps’ Not Enough for FATF?
According to the FATF report, Russia has made some progress in regulating cryptocurrencies, but it falls short of meeting the necessary requirements.
It is probable that this alludes to a specific bill that was proposed in the middle of 2020 called On Digital Financial Assets.
According to Russian professionals in the cryptocurrency field, the law was essentially just a fancy list of words related to crypto, as reported by Cryptonews.com.
Russia has officially prohibited the use of cryptocurrency for transactions, yet has not implemented any additional regulatory policies. Every effort to establish regulations within the sector has been unsuccessful.
The main reason for this is the deadlock between the Central Bank and key government departments.
Government departments aim to regulate and integrate the growing domestic cryptocurrency industry into the tax framework, especially focusing on imposing taxes on the expanding crypto mining industry in Russia.
Nevertheless, the Central Bank’s main goal is to eliminate cryptocurrencies entirely. Instead, the bank is focused on moving forward with its accelerated development of the digital ruble.
Not only do companies from Russia make the situation more complicated but they also use cryptocurrency as an instrument for the potential circumvention of sanctions introduced by the US, the UK and the European Union.
According to rosfinmonitoring data, the cryptocurrency transaction volume of Russia demonstrated the threefold growth during the period from January to November 2023.
When the leader of the agency Yuri Chikhanchin uttered to the lawmakers the necessity of raced-decision making on the sector regulation, the decision convinced the nation’s hopes.
Frequently Asked Questions:
What could have caused the dropping of Russia’s FATF ratings?
The FATF rating image of Russia has worsened because its regulation over virtual world and cryptocurrencies is not strong enough. Russia’s status moved further from being on track of implementations to being vague or unclear with the status changing from fully compliant to partially compliant states.
Can you provide information on when the downgrade was officially announced and by whom?
The official German Neglyad informed the public that Rosfinmonitoring, Russia’s financial anti-terrorism regulator, had downgraded the rating. The news came at the FATF ministers session on 23, February
Which entity performed the assessment that led to the rating reduction?
The EAG, a member of FATF, completed an analysis leading to the downgrade.
Whether there was a past financial audit carried out by FATF for Russia, and what level of compliance was this audit able to achieve?
In 2019, Russia achieved full compliance with the FATF audit, receiving the highest ranking. However, the recent downgrade marks a major shift from its previous rating.
Could Moscow be considering implementing fresh regulations in response?
The article hints at possible new regulations in Moscow to improve its crypto regulatory framework, but concrete information on these regulations is lacking.
How has Russia approached regulating cryptocurrencies through legislation?
Russia’s On Digital Financial Assets legislation was introduced in mid-2020. Nevertheless, the FATF report suggests that Russia’s efforts to tackle crypto regulation have fallen short.
What was the role of the crypto-exchanges in the growth of the unregulated crypto sector in Russia and why?
Russian institutions fighting for authority in the crypto market are crashing into each other as the Central Bank and other government ministries argue for different approaches. The authorities form legislative frameworks, which require the legalization of electronic currencies and their taxation, while the Central Bank is making an effort to ban them and foresee the development and introduction of the digital ruble.
Is cryptocurrency adoption issue in Russia different after overall regulation issues addressed?
Against a background of regulatory barriers, the number of crypto trading in Russia over the period of past year until November 2023 have dramatically tripled and increased threefold. Russian business entities are getting fond of crypto more often and use it as a mean of making cross-border payments as a way of avoiding the international sanctions.
What are your guys’ concerns about the cryptocurrency regulation from Rosfinmonitoring?
As for Rosfinmonitoring’s head Yuri Chikhanchin, CBDC needs to be regulated immediately by lawmakers to reduce the number of risks cryptos bear.This demonstrates an acknowledgment of the necessity for a well-defined regulatory structure for cryptocurrency operations in Russia.
The part about crypto regulation and Russia’s progress in the FATF report statement is what?
The FATF report has appreciated what Russia has done in the sphere of cryptocurrency regulation, but the report said that what they had done should be looked at in a critical way. The report evidenced a gap between Russia statement and the international commitments the FATF principally to that end has formed on disguised transactions with virtual assets and cryptocurrencies pursuing.
