Fly by night firms the focus of new financial crime task force

By: Modern Russia on January 18, 2012

On January 12, President Medvedev ordered the creation of a working group that will develop the country’s first financial task force to fight money laundering, fiscal sponsorship of terrorism, tax evasion and customs duty fraud. The task force will be led by First Deputy Prime Minister Viktor Zubkov, who was the head of Rosfinmonitoring, Russia’s financial monitoring agency, from 2004-2007. The task force will be made up of officials from across the spectrum of the country’s law enforcement and financial regulation agencies, including the Central Bank and the Federal Tax Service.

One of the task force’s main aims will be to crack down on the rampant fly by night firms that process questionable financial transactions and dissolve while leaving little or no trace of their records or dealings. In October Yury Chikhanin, head of Russia’s Financial Monitoring Service, said transactions processed by these fly by night firms on utility payments are worth 40 billion rubles ($1.3 billion) each year.

The task force will also have the mandate to establish updated standards for preventing and investigating financial crimes and will consult on related legislative proposals. The formation of the task force is the latest in a series of steps taken by the president to curb fly by night agencies amidst other acts of fraud across Russia’s business and financial sector over much of the past year. The group’s establishment was backed in part by the Financial Action Task Force, an “inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing.”

First Deputy Prime Minister Viktor Zubkov with President Medvedev and Prime Minister Putin in 2008.