The Financial Action Task Force has lowered Russia’s status to “mostly compliant” because of the country’s inadequate framework for regulating cryptocurrencies.
Regarding Russia’s capacity to oversee and prevent questionable transactions utilizing virtual assets, the Financial Action Task Force (FATF) has just revised Russia’s compliance grade to “partially compliant.”
According to RBC’s reporting, the major reason for this downgrade is the problems with Russia’s “On Digital Financial Assets” law from 2020. There is an incomplete component of the regulatory puzzle when it comes to digital currencies and assets; the legislation identifies DFA providers but doesn’t specify which organizations may operate as DFA and cryptocurrency providers.
In addition, there is a lack of a thorough framework for regulating and overseeing cryptocurrency transactions in Russia, and the country’s present legislation on digital financial services forbids the use of digital currencies for payment by Russian nationals. An increase in illegal activities using crypto assets has been associated with the absence of comprehensive regulation.
Rosfinmonitoring, a Russian financial monitoring organization, reports that the volume of unlawful cryptocurrency transactions has increased significantly, tripling in 2023.
In 2019, Russia received the highest compliance score from the Financial Action Task Force (FATF), an international organization that aims to establish worldwide standards to combat the laundering of funds and the funding of crime. Its position in the global financial world has been further confused since 2022, when geopolitical tensions led to a reduction in Russia’s influence within the FATF.
The data from Rosfinmonitoring shows that the number of unlawful crypto transactions tripled between January and November of last year, highlighting the urgent need for regulatory reforms. In order to strengthen the country’s defenses against financial crimes made easier by digital currencies, the agency has demanded immediate action to fill the regulatory void.
In the midst of these regulatory hurdles, rumors have circulated that Russia is suggesting the BRICS nations establish a payment system that would settle trades using CBDCs, with the goal of strengthening financial cooperation and decreasing dependence on conventional global financial mechanisms.
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