International Crime & Money Laundering: Russia's Report

Meeting with Head of the Federal Financial Monitoring Service Yury Chikhanchin

I found no graphic depicting government involvement.

In virtually every summit declaration I’ve read, there’s an article about the need to combat international crime. Within the just published BRICS Declaration, that is conveyed in Articles 36 & 37 with Article 36 saying the following which is rather standard:

We reiterate our commitment to preventing and combating illicit financial flows, including money laundering and the financing of terrorism, extremism and proliferation, as well as other forms of transnational organized crime, such as drug trafficking, cybercrimes, crimes that affect the environment, illicit trafficking of firearms, trafficking in persons, corruption and the use of new technologies, including cryptocurrencies, for illegal, in particular terrorist, purposes. In this regard, we underscore the importance of enhancing capacity-building and technical assistance, particularly for developing countries, to support the implementation of relevant international obligations. We reaffirm our commitment to the principles of technical and non-politicized nature of international anti-criminal cooperation, including for the purpose of prevention and of financial investigations.

I recall Larry Johnson saying in one of his chats that the major drug cartels couldn’t operate without the assistance of the major banks to launder their illegal profits. Michael Hudson has provided some very shocking and interesting revelations about US government involvement in that criminal activity. This excerpt is from an autobiographical interview made in 2018, although his writings and interviews are all sprinkled with this info:

That gave me the clue about what people these days talk about money laundering. In the last few months that I worked for Chase Manhattan in 1967, I was going up to my office on the ninth floor and a man got on the elevator and said, “I was just coming to your office, Michael. Here is a report. I’m from the State Department (I assumed that this meant CIA). “We want to calculate how much money the US could get if we set up bank branches and became the bank for all the criminal capital in the world.” He said, “We figured out we can finance, (and he said this in an elevator), we can finance the Vietnam War with all the drug money coming into America, all of the criminal money. Can you make a calculation of how much that might be?”

So I spent three months figuring out how much money goes to Switzerland, from drug dealings, what’s the dollar volume of drug dealings. They helped me with all sorts of statistics on that, and said, “We can become the criminal capital of the world and it’ll finance the dollar and this will enable us to afford the spending to defeat communism in Vietnam and elsewhere. If we don’t do that, the bomb throwers will come to New York.”

So I became a specialist in money laundering! Nothing could have better prepared me to understand how the global economy works! I had all the statistics, I had the help of the government people explaining to me how the CIA worked with drug dealing and other criminals and kidnappers to raise the money so it would be off the balance sheet funding and Congress didn’t have to approve it when they would kill people and sponsor revolutions. They were completely open with me about this. I realized they’d never done a security check on me. [My Emphasis]

I’ll bet most every reader never read the above, although many likely held suspicions. It’s all of the above that the rest of the world’s nations try to combat, while many of us know just how broad all that criminal activity is nowadays. Today, Putin met with his point man on this topic for a review of the current status. As you’ll read, there’re very serious amounts of money involved just in Russia, and important people are involved as another Russian general was arrested yesterday while the fired minister of transportation killed himself as he too was likely being investigated for corruption from his days as Kursk Governor. Now for the report:

Yu. Chikhanchin: Vladimir Vladimirovich, I wanted to tell you how the national anti-money laundering system works in 2024, and to report on the results. I also wanted to discuss the challenges that lie ahead.

V.Putin: Yes, good.

Yu. Chikhanchin: The most important task on the international platform was to preserve our positions and prevent Russia from being included in the sanctions lists. We have succeeded in this at the FATF [Financial Action Task Force] meetings, and we continue to expand the formats of international action. Currently, about 40 countries are actively cooperating. This includes the BRICS countries, parliamentarians, and the International Compliance Council.

As for BRICS, of course, we have taken as a basis the decisions of the Kazan Declaration, which outlines our topics related to both information and communication technologies and [the fight] against corruption, against drugs and transnational crime. We are preparing for the next FATF assessment. We have created an interdepartmental commission.

We are creating a system of information exchange between countries. Taking into account the suspension of activities in the Egmont Group, this association of financial intelligence agencies, we [have] our own program, 30 countries have already joined together, and the exchange of [information] is closed.

Together with VTB and the Central Bank, we are improving the Transparent Blockchain project, which allows us to control and monitor cryptocurrency transactions.

The Center for International Risk Assessment, [the decision to] which was signed and launched by the heads of the CIS countries. Today, 19 countries have already joined, in addition to the CIS, and we are identifying the main risks. Based on these materials, 50 international shadow platforms have been identified, more than 600 financial investigations have been conducted, and more than 100 criminal cases are ongoing.

We are currently actively working with China, Kazakhstan, Kyrgyzstan, Belarus, and the United Arab Emirates on transactions related to foreign economic activity using fictitious documents. Our colleagues are very actively helping us.

As for cross-border financial flows, I have already reported that the vector has changed somewhat: it is now the Middle East, Southeast Asia, and the Central Asian region. This corresponds to the creation of a unified system of fast payments, an alternative to SWIFT, primarily in the CIS countries. Alternative forms of payment, such as gold and cryptocurrency, are being actively used. Now, netting has emerged: the clearing operations that we are currently engaged in.

V. Putin: Regarding the shadow platforms. What are these international shadow platforms?

Yu. Chikhanchin: These are the platforms that criminals are using today. The money has been stolen and transferred abroad, and we have identified all the criminal flows together with the countries: where they are hidden, in which banks, and in which countries. We have identified this to date. We are currently searching for evidence and looking at who else has used these shadow platforms.

Of course, our main allies in resolving these issues are financial institutions, primarily banks. It should be noted that, together with the Central Bank, the Prosecutor General's Office, and law enforcement agencies such as the Ministry of Internal Affairs and the Federal Security Service, we have managed to maintain the compliance of approximately 90% of financial institutions with the law. This is a very high percentage.

Last year, the Central Bank revoked the licenses of six banks, but the share of suspicious transactions in regional banks increased slightly. The non-banking sector also started to commit some errors, so we are paying special attention to this issue. To address these issues, we are changing the regulatory framework. Last year alone, about 20 laws were adopted.

As for the dynamics of changes in financial flows, I would like to say that, together with the Central Bank and law enforcement agencies, we have managed to reduce the use of budget funds in high-risk banks by almost 2.5 times, and we have prevented the transfer of about 500 billion rubles into the shadow economy. This is based on the criteria and indicators developed jointly by the Central Bank and law enforcement agencies. We have also blocked the operations of high-risk organizations, amounting to about 20 billion rubles. These are significant amounts.

We have managed to practically reduce the use of such financial institutions as notaries. That is, previously notaries participated in the confirmation of questionable transactions, the same Commission for labor disputes and the market of professional participants in the securities market.

It should be noted that the situation in the courts, which were also involved in confirming transactions with questionable operations, has changed dramatically. This year alone, they have prevented about 100 billion rubles from entering the shadow market.

As for the public sector. First of all, we pay attention to contracts that go with a single contractor, and those where there is an additional agreement to increase the contract price. All this made it possible to reduce the participation of technical companies by about 10 percent. Work is currently underway to identify when contract owners use assets for personal purposes, that is, they acquire real estate and cars for themselves, hiding behind the activities of the contract.

Together with the Prosecutor's Office and, again, the Federal Security Service, the Ministry of Internal Affairs, and the Federal Antimonopoly Service, we have identified tenders with restricted competition worth 39 billion rubles. Through our joint efforts, we have saved more than 27 billion rubles in budget funds. We are working on almost 1,300 criminal cases and providing assistance, with a total damage of approximately 26 billion rubles.

As for national projects in the public sector. I would like to say that you once supported a very important area–-treasury support. And exactly where it exists in the federal budget, there is practically a minimum number of terminated contracts, only about nine percent. But there is a problem in the budgets of subjects and municipal budgets, where the growth is about two or three times. Therefore, we are now planning to launch a system of treasury support specifically for the subject's capabilities, in order to track these types of operations there as well.

Based on this, we have noticed that a number of regions require close attention. For example, there are regions where approximately 50 percent of contracts are terminated based on the amount, and approximately 20 percent of contracts are terminated based on the number of contracts. We are paying special attention to these regions. We are primarily working with law enforcement agencies and the treasury.

The second problem is the increase in the price of contracts. Within 10 [percent], this is the acceptable cost of an increase during the execution of a contract. However, there are regions where this amount exceeds and is much higher. We have identified these regions, and we are actively working with law enforcement agencies and the Treasury to address them. The increase can be up to 50 percent.

We continue to work within the framework of the state defense order. One of the areas is the reduction of accounts receivable, which has decreased by more than five times. We are able to solve this issue together with the Ministry of Defense and the Prosecutor General's Office.

At the same time, there are a number of budget financing mechanisms in the form of subsidies, concession agreements, and letters of guarantee, where the level of opacity is very high and requires additional attention and processing. In the case of one of the subsidies, we reported to the Ministry of Industry and Trade that the partner selected for the subsidy was not the most appropriate, and the subsidy was stopped.

Work is being carried out to counteract corruption. Here, of course, it is worth noting that crimes are usually committed with cryptocurrency and through the use of affiliates.

V. Putin: The use of cryptocurrency in payments has increased, hasn't it?

Yu.Chikhanchin: Yes, it was the corrupt officials who started using it.

Together with the Federal Security Service, the Ministry of Internal Affairs, and the Prosecutor General's Office, we worked out the methodology, identified the so – called decision-making points: where money is distributed, and focused commercial banks on the model of a corrupt official. They have now started to inform us (increased the number) about such transactions, that is, we have started to grow.

And of course, we work together with the Presidential Administration and the Prosecutor General's Office on anti-corruption requests, declarations, and so on. In total, we are working on about 400 corruption cases, and we are actively involved. So far, we have identified approximately 13.5 billion rubles in damages. And we have already returned about 5 billion to the state.

You asked a question about shadow platforms at the international level. We also have shadow platforms in Russia. Last year, six platforms with a turnover of approximately 11 billion rubles were closed. Approximately 350 organizers and customers of these platforms were identified. As a result, the price of cash withdrawal increased dramatically, with a market value of approximately 20-25 percent, which is very high. However, these services are still in demand.

Of course, there are a number of concerns about the fact that budget recipients are using the services of shadow platforms, so we are working closely with the Treasury and the Prosecutor General's Office. Unfortunately, I must say that there are still 10 platforms operating in our country, and we are working on them.

Another area that raises a lot of questions, and you even held a meeting on this topic, is the involvement of citizens in various shadow schemes. This is primarily due to the increased availability of financial services and the emergence of information and communication technologies. The reach of these schemes has expanded to include more than 50,000 websites that actively promote them. These schemes have become transnational, involving individuals from various countries, and the number of non-residents involved in these schemes has increased by almost 3.5 times. However, the concern lies primarily with the involvement of minors. These are schoolchildren, and today there are already seven-year-old schoolchildren who are involved in these operations. They have lunch cards, which are usually linked to their parents' accounts, and criminals are taking advantage of this. This is a complex system at work. However, this is only one aspect of the crime.

As a rule, this criminal world then begins to criminalize those who have fallen into these shadow schemes, involving them in drug trafficking, extremism, and terrorism. This is a very serious problem. We are currently working on these issues with the Ministry of Internal Affairs, the Federal Security Service, the Prosecutor General's Office, and the Investigative Committee.

Nevertheless, we have managed to activate the counteraction mechanism and have managed to stop the activities of about 90 financial pyramid schemes and pseudo-brokers. Roskomnadzor has blocked about 40,000 websites. The activities of about 60 illegal lenders have been stopped. About 700,000 accounts used by the criminal world have been blocked, and about 10 billion rubles have been seized. These are significant amounts.

As for working on drug trafficking and financial income. Here it is necessary to say that the number of drug releases on the territory of Russia (synthetics) has increased and the "shoulder" of regional calculations has decreased, it has become more difficult to identify. But we are actively working, and, of course, one of the main reasons is distribution via the Internet, payments via the Internet, via instant messengers, which are very difficult to detect and block.

In addition, foreign crypto exchanges and "drop" cards are actively used, as you know. This gave us the opportunity to work with the Ministry of Internal Affairs, the FSB, and the Investigative Committee to correct (we are constantly correcting it) the behavior model of drug traffickers, and bring it to the banks. This allows us to increase the flow that we are processing. Last year alone, there was about a six-fold increase in [the number of] messages.

We are working on more than 200 criminal cases in this area, including those related to the legalization of cryptocurrency. This is a success, and we have already recovered approximately 3 billion rubles.

Together with our colleagues from Belarus and Kazakhstan, we have eliminated a transnational criminal group (together with law enforcement agencies). There are about 500 members, and the turnover is about 1 billion rubles. These are drug dealers.

I would like to say a few words about the financing of terrorism and extremism. We work together with the FSB, the Interior Ministry, the Investigative Committee, and the Prosecutor General's Office to keep a list of terrorists and extremists, which is constantly being updated. Only last year it was possible to freeze assets worth about 250 million rubles. The interdepartmental commission, pre-trial and extra-judicial freezing, including on extremist articles, works well.

In the international direction, lists are exchanged with countries. This has allowed us to identify and freeze the accounts of about 1,300 people on our territory. And about 400 or more [accounts] have been frozen by our colleagues abroad, Russians who use services.

In addition, we continue to work on the new functions assigned to us, which are related to economically significant organizations. This includes the deprivation of corporate rights from foreign holdings and companies.

And another functionality is currency monitoring. Today, I would like to say that the majority of our exporters are law-abiding and worthy of respect: with a 40 percent standard, they sell approximately 70 percent. I would like to say that there is a significant increase in the share of the ruble in transactions, as well as a significant increase in trade in the currencies of friendly countries and a decrease of approximately two times in trade with unfriendly countries.

V. Putin: Are these dollars, euros, and pounds?

Y. Chikhanchin: Yes, they are falling significantly, they are there, these deals, transactions, but practically there are fewer and fewer of them.

V. Putin: What is netting?

Y. Chikhanchin: Netting is when the exporter gives the importer an opportunity, the exporter does not return the money, the importer pre-imports the goods with his money and pays already on the territory of the country. This is a clearing operation.

V. Putin: But you're tracking everything, right?

Yu. Chikhanchin: Yes, there are some issues there, I will stop on them separately.

As for currency monitoring. At the same time, our monitoring, although we are not a currency control authority, has revealed non-fulfillment of import contracts worth 7 billion (currently being worked on together with customs), and illegal withdrawal of assets worth about 60 billion (also being worked on). In total, this mechanism has resulted in the additional return of approximately 130 billion rubles.

But there is another problem–-not all participants in foreign economic activity designate their affiliated companies. We identified about 250 such companies that have made transactions worth about 460 billion.

But, given the fact that the population is being actively drawn into shady transactions, we continue to work on the International Financial Olympiad. You were at the third Olympiad and supported the so-called creation of a financial security movement.

V. Putin: I have signed your paper.

Y.Chikhanchin: Thank you very much. We have already launched this international movement. [Dmitry] Chernyshenko has been elected chairman of the movement with the consent of [Mikhail] Mishustin.

This is the fifth time we've held the Olympiad this year. Taking into account your recommendation, we've decided to hold it in the regions. This time, it will be held in Krasnoyarsk, and we plan to continue holding it in various regions. While the first Olympiad had only seven participating countries, the second had 12, the third had 19, and the last had 36, this year, 40 countries have expressed interest. The Olympiad will take place in late September and early October.

We are currently conducting financial security classes and preliminary selection rounds. More than five thousand Russian and foreign students and schoolchildren have already registered for the selection round. This number is growing.

In addition to the Olympiad, there is a large number of events: international forums, sports, and cultural programs. Last year, children's drawings from Siberia were exhibited, and this year, we are holding a competition for national costumes. Everyone has supported this initiative. There are various financial security tests, which means that this movement has been launched and is still ongoing.

Therefore, we invite you to the fifth anniversary Olympiad in Krasnoyarsk, which will take place in late September and early October.

V. Putin: Okay. Thank you very much.

I understand that the use of gold bars in transactions has increased significantly.

Yu. Chikhanchin: Yes, it is significant.

V.Putin: More than twice as much.

Yu. Chikhanchin: Yes, it has dropped a little now, although it is still active. There is a complete lack of regulation regarding the handling of gold. We are currently working closely with the Ministry of Finance and the Central Bank to amend the legislation, and I believe that we will be able to make improvements. Essentially, the free export of gold is yielding results. It is advantageous to purchase gold here for rubles, export it, sell it for foreign currency, and then convert it back. This is the game being played. The price of gold is very high today, and the difference is exactly [profit].

V. Putin: The historical peak [of the gold price].

Yu. Chikhanchin: A very good margin. [My Emphasis]

Because Russia is the West’s main adversary, it’s subjected to a wide variety of many attacks. Yes, traditional corruption still occurs, but the great mass is in the drug and weapons trade. I find it funny that Russia and other nation’s main allies in the fight are banks while within the Outlaw US Empire and wider West it’s the banks who are allied with governments in this illegal venture that as Hudson described has a geopolitical and geoeconomic aspect. The more unsavory aspects of this criminality—human trafficking and organ harvesting—is occasionally covered by Maria Zakharova in her Weekly Briefings but merits much greater exposure. The use of drugs including alcohol to destabilize societies is linked to the Colonizing & Plundering Eras, with the Anglo-Americans being and remaining the primary instigators. The testimony by Hudson, Johnson and many others indicts the US Federal government as being the primary facilitator of the drug trade within the USA that goes back at least 100 years. The lawbreaking became policy many decades ago, which ought to make readers pause and reconsider what the Drug Enforcement Agency’s main job is outside the Empire’s borders. Some will also recall the song by Glenn Frey, “Smuggler’s Blues,” and the lies it contains based upon the known facts even at that time—1984.

It’s encouraging to see more nations banding together to fight what’s an imperialist scrouge. The crime scene is the entire planet. That adult versions of the schoolyard bully extorting children’s lunch money now exist is nuts. To quote Frank Zappa, it’s “Gross and perverted,” the perpetrators “obsessed and deranged,” yet “they’ve existed for years, but very little has changed.” Meanwhile, today the banks in New York and at other offshore laundering centers will process billions as they do daily without a care in the world of being caught, arrested, found guilty, and facing major prison time. If they were the transparent public utilities they ought to be, this criminal abetting wouldn’t be happening.

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