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Russia: Kremlin Announces New Regional Grouping To Fight Terrorist Financing

  • Jeremy Bransten

The Kremlin has announced the establishment of a new regional body to fight money laundering and terrorist financing. In addition to Russia, the group will also include Belarus, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. How will the new body operate -- and what do experts think about it?

Prague, 6 October 2004 (RFE/RL) -- The Commonwealth of Independent States (CIS) has no shortage of sub-groups, including various economic unions, cooperation councils, and collective security organizations that group Russia with several other member states.

On 5 October, the list grew longer. Viktor Zubkov, head of Russia's Federal Financial Monitoring Service, announced at a Moscow conference the creation of a regional bloc aimed at fighting money laundering and terrorist financing.

At the same conference, Russian Finance Minister Aleksei Kudrin emphasized the importance of tracking down those who finance terror operations. "The modern system of revealing the channels of financing [of terrorism] is very important for the fight against terrorism," he said. "The suicide bombers are not the cause; they are rather the executors, a tool. Nowadays, they are backed by international organizations. It is necessary to remove the causes, to hunt for those who order, who organize the terrorist acts."

Analysts say that despite a far-from-perfect record, Russia's efforts in recent years to address the problem of illicit finances deserve praise. Stephan DeSpiegeleire, of the RAND Europe think tank in The Hague, says Russia has recently reformed its legislation to give law enforcement agencies the tools to combat illicit money transfers. The establishment of the Federal Financial Monitoring Service, which has the power to audit all suspect bank transactions over $100,000, was also an important step forward.

De Spiegeleire believes it makes both practical and political sense for Russia to propose regional cooperation in this field. "On this particular issue of money laundering, Russia has actually been one of the 'good students,' if you want, as opposed to most other post-Soviet states, which have been much worse," he said. "They have set up a financial monitoring service, [Russia] has been stricken from the list of the Financial Action Task Group of the G7/G8, contrary to most post-Soviet states. So they`re actually doing relatively well in this area. And since it is a joint interest that we share -- both between the West and Russia and between the post-Soviet states, it's very hard for the West to make much of a point about this. So this is one of the areas in which Russia can still actually do something, get some political clout out of it and not be reprimanded by the rest of the world or the other CIS countries because this is an area where everybody shares such a visible interest."
"Institutionally speaking, it's still a very strange country, Russia, to be playing this role in the post-Soviet space. But relative to the others, they're in better shape."


De Spiegeleire said Russia can provide assistance to its CIS partners in drafting anti-money-laundering legislation -- a necessary first step. He cites Belarus, where few such measures exist, as one country that clearly needs reform. Belarus's Infobank was cited by the U.S. Treasury Department as a money-laundering center for the former Iraqi regime.

But De Spiegeleire acknowledges that Russia's record is more problematic when it comes to implementing new legislation. And he voices concern about giving even more power to questionable parts of the Russian government.

"Despite the positive developments that have taken place in Russian anti-money-laundering policy, Russia remains far from a normal player in this field. The key agencies that are involved within Russia, the law-enforcement agencies, the intelligence agencies -- these are all the negative institutional actors from the 'bad old days' that are coming out of the woodwork again. And they're also the ones that are being entrusted with this new task. The Russian state was already so hypertrophied and with these additional tasks that they've gotten, especially after [last months' terrorist attacks in] Beslan, they`re getting even larger. And so, institutionally speaking, it's still a very strange country, Russia, to be playing this role in the post-Soviet space. But relative to the others, they're in better shape," De Spiegeleire said.

So far, there has been no major comment on the Russian proposal from any of the other countries meant to be involved.

But some nongovernmental organizations are expressing concerns that the authorities will use the pretext of fighting terrorism to further violate human rights.

Khalida Anarbaeva is deputy head of the Uzbek chapter of the Internews media NGO. In a telephone interview from Tashkent, she told RFE/RL that the Uzbek government earlier this year already tightened restrictions on NGOs receiving funding from abroad -- under the pretext of fighting terrorism.

"After this [new government] regulation, our NGO -- the local Internews chapter -- which was expecting its funds, never received them. The money was deposited into our bank account but we never received it. We went to the bank several times. I sent a letter saying that if the bank did not give us our money, in defiance of a presidential decree on the timely paying out of salaries -- because our employees depend on this grant money as salary money -- I would be forced to sue," Anarbaeva said.

Instead, the bank sent the money back to the depositor. A few months later, the Uzbek chapter of Internews was shut down for six months, pending a government investigation of alleged violations in its registration documents.

Anarbaeva believes the moves against her as well as other NGOs in Uzbekistan are politically motivated -- with the war on terror providing a convenient excuse for the government to silence dissidents. "Besides us, they have closed many other organizations which worked with grant money and were nongovernmental organizations," she said. "They have literally neutralized the NGO sector."

(Adolat Najimova of RFE/RL's Uzbek Service contributed to this report.)
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