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Head of the Federal Service for Financial Monitoring Yury Chikhanchin: Mr President, I would like to report on the performance of the national money-laundering prevention system in 2024 and to briefly outline the results and the tasks ahead.

Vladimir Putin: Yes, please go ahead.

Yury Chikhanchin: Our main objective on the international front has been to maintain our positions and prevent Russia from being placed on sanctions lists. We have managed to do this at the Financial Action Task Force meetings, and we continue expanding the formats of our international efforts. At present, we are actively engaged with around 40 countries, including BRICS nations, parliamentarians and the International Compliance Council.

With regard to BRICS, we have based our work on the Kazan Declaration, which outlines our priorities in areas such as information and communication technologies, anti-corruption efforts, combating drug trafficking, and transnational crime. We are preparing for another FATF evaluation. With your support, we have established an interagency commission – thank you very much for that.

We are building an information-sharing system among countries. Given the suspension of our participation in the Egmont Group, which unites financial intelligence units, we have launched our own programme. Thirty countries have already joined, and we are now exchanging information securely.

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

The International Risk Assessment Centre, a project endorsed and launched by the CIS heads of state, is also operational. So far, 19 countries have joined beyond the CIS. The centre helps identify key risks. Based on its findings, 50 international shadow platforms have been uncovered, over 600 financial investigations carried out, and more than 100 criminal cases are currently underway.

We are also working actively with China, Kazakhstan, Kyrgyzstan, Belarus and the United Arab Emirates on transactions involving foreign economic activity based on fraudulent documents. Our partners are providing very active support in this area.

With regard to cross-border financial flows, as I noted last time, our focus has shifted slightly towards the Middle East, Southeast Asia, and Central Asia. This shift aligns with the development of a unified fast payment system that serves as an alternative to SWIFT, primarily involving CIS countries. Alternative payment mechanisms are being actively employed, including gold, cryptocurrencies, and, more recently, netting arrangements: clearing operations, which we are currently implementing.

Vladimir Putin: What are these international shadow platforms?

Yury Chikhanchin: These are platforms that are used by criminals today. Stolen funds continue to be transferred abroad, but together with our international partners, we have successfully traced the full trajectory of these financial crimes: where the money was hidden, in which banks, and in which countries. At this stage, we are gathering evidence and investigating who else may have utilised these shadow platforms.

Our most valuable allies in addressing these issues remain financial institutions, especially banks. It is noteworthy that, in cooperation with the Central Bank, the Prosecutor General’s Office, and law enforcement agencies, such as the Interior Ministry and the FSB, we have succeeded in ensuring that approximately 90 percent of financial institutions remain law-abiding. This is a very high compliance rate.

Last year, only six banks had their licences revoked by the Central Bank. However, there was a slight uptick in suspicious transactions among regional banks. The non-banking financial sector has also begun to show some concerning trends, which are now receiving increased attention. In response, we have been actively updating the regulatory framework: approximately 20 laws were adopted just last year.

In terms of shifts in financial flow dynamics, we, together with the Central Bank and law enforcement agencies, managed to reduce the use of budgetary funds in high-risk banks by nearly 2.5 times, thus preventing around 500 billion rubles from entering the shadow economy. These results are based on specific risk indicators developed jointly by the Central Bank and law enforcement. We also blocked approximately 20 billion rubles in transactions from high-risk organisations, which is significant.

We have also nearly eliminated the use of financial mechanisms such as notarial services. In the past, notaries were involved in certifying questionable transactions, as were Labour Dispute Commission and professional participants in the securities market.

Importantly, we have seen a major shift in the behaviour of the courts, which were previously involved in validating dubious transactions. This year alone, judicial action has prevented around 100 billion rubles from entering the shadow financial system.

In the public sector, we are focusing on contracts awarded to sole-source suppliers and those involving amendments that significantly increase the contract value. These efforts have resulted in a roughly 10 percent decrease in the participation of operational companies. Investigations are also underway into cases where contract holders are found to be using assets for personal enrichment by purchasing real estate or vehicles under the guise of contract fulfilment.

Jointly with the General Prosecutor’s Office, the FSB, the Interior Ministry, and the Federal Antimonopoly Service, we have uncovered procurement schemes under restricted competition conditions totalling 39 billion rubles. Through joint efforts, over 27 billion rubles in budgetary funds have been saved. At present, we are supporting investigations into nearly 1,300 criminal cases with estimated damages of about 26 billion rubles.

As for the national projects in the budget sphere, I would like to mention that some time ago you supported a very important line – treasury support. In areas where this support exists in the federal budget, the rate of terminated contracts is minimal, at no more than nine percent. However, there remains a problem in the regional and municipal budgets, where the termination rate is two to three times higher. This is why we are planning to launch the treasury support system there, to monitor such operations in these areas as well.

Given this, we have noticed that some regions require close attention. For instance, in some regions, approximately 50 percent of contracts are terminated in terms of total value, and up to 20 percent in terms of the number of contracts.

In such cases, we pay special attention to these regions. We, along with law enforcement authorities, begin to investigate these cases and interact with the Treasury.

The second problem relates to increases in contract amounts; a 10 percent increase is permissible during contract execution. Yet, in some regions, these increases are much higher. We have identified these regions and are working with them in collaboration with law enforcement authorities and the Treasury. Such increases sometimes reach up to 50 percent.

We continue our work under the state defence order. One of the areas of focus is the reduction of accounts receivable, which have been reduced by more than five times. We have managed to resolve this issue jointly with the Defence Ministry and the Prosecutor General’s Office.

At the same time, we have some budget financing mechanisms in the form of subsidies, concessionary agreements and letters of guarantee, which exhibit a very high degree of non-transparency and therefore require special attention and elaboration. I can say that, in working on one subsidy, we and the Ministry of Industry and Trade reported that the partner designated to receive the subsidy had not been selected properly, resulting in the suspension of the subsidy payment.

We are working on combating corruption. The first thing that stands out here is that offences are often committed using cryptocurrency and through affiliates.

Vladimir Putin: Has the share of cryptocurrency increased in settlements?

Yury Chikhanchin: Yes, those involved in corruption have also begun to use it.

Together with the Federal Security Service, the Interior Ministry and the Prosecutor General’s Office, we have developed a system of methods and identified so-called decision points, where money is distributed, and commercial banks have been directed towards identifying corrupt individuals. They have started to report information about such transactions to us, resulting in an increase in reported cases.

Furthermore, we are working together with the Presidential Executive Office and the Prosecutor General’s Office to investigate cases of corruption and non-disclosure. In total, we are working about 400 corruption cases, where we are actively involved. At this point, the amount of damage we have helped uncover is about 13.5 billion rubles, with about 5 billion already transferred back to state coffers.

You asked about shadow platforms at the international level. We have shadow platforms in Russia as well. Last year, we shut down six platforms with a total turnover of about 11 billion rubles, while identifying about 350 creators and beneficiaries of these platforms. That sent cash-out fees soaring, to some 20–25 percent across the market, which is very high. Yet, some continue to use these dealers’ services.

Our major concern is that budget recipients, too, use the services of shadow platforms, so we work closely with the Treasury and the Prosecutor General’s Office. Unfortunately, I must admit that today, about 10 shadow platforms continue to operate, but we are investigating them.

Another issue that raises concerns – one you highlighted in a dedicated meeting – has to do with people getting recruited into shadow financial schemes. This is primarily facilitated by the growing accessibility of financial services and modern information and communication technologies. They offer fraudsters a greater audience reach: more than 50,000 websites are always online, attracting users. This threat is transnational in nature, with the number of non-residents participating in these schemes almost 3.5 times greater.

Undeniably, minors are of particular concern. Fraudsters now often lure school-age children into their schemes – some reports mention children as young as seven. They use cards to pay for their lunches; these cards are usually linked to their parents’ bank accounts, and criminals gain access to them, triggering a whole fraudulent scheme. But this is only part of the crimes.

As a rule, the criminal world tends to criminalise individuals who became part of shady schemes, recruiting them for transporting drugs, or for acts of extremism and terrorism. This is a very serious problem. We are currently collaborating with the Interior Ministry, the FSB security service, the Prosecutor General’s Office, and the Investigative Committee on a number of cases.

Nonetheless, we have succeeded in putting in place a counteraction mechanism, terminating the activities of about 90 financial pyramids and pseudo-brokers. Roskomnadzor has blocked about 40,000 suspicious websites. The activities of about 60 illegal lenders have been ended; about 700,000 accounts in criminal use have been blocked, and assets worth about 10 billion rubles have been seized – these are large sums.

Regarding efforts to combat illicit drug trafficking and related financial flows, it should be noted that the production of synthetic drugs in Russia has increased, while the logistical footprint of regional distribution has narrowed, making such operations more difficult to detect. But we are working actively in this sphere. One of the primary challenges remains the growing reliance on internet websites for distribution and payment, via messenger services, which are inherently difficult to trace and block.

Additionally, the use of foreign cryptocurrency exchanges and drop cards has become widespread. This trend has prompted us, together with the Interior Ministry, the FSB, and the Investigative Committee, to continuously refine behavioural models of drug traffickers and share this information with banks, thus substantially increasing the message flow we can process: six times over the past year alone.

In this area, we are working on over 200 criminal cases, many involving the laundering of proceeds through cryptocurrency. These investigations have already led to the recovery of approximately 3 billion rubles.

Together with Belarusian and Kazakhstani law enforcers, we have dismantled a cross-border criminal network comprising around 500 individuals, with an estimated turnover of 1 billion rubles, primarily engaged in drug trafficking.

In terms of combating terrorism and extremism financing, we are working in close coordination with the FSB, the Interior Ministry, the Investigative Committee, and the Prosecutor General’s Office. We maintain an updated list of terrorists and extremists. In 2024 alone, we successfully froze assets totalling about 250 million rubles. Our interagency commission, which enables both pre-trial and extrajudicial asset freezes, including those under extremism-related statutes, is functioning effectively.

On the international track, we exchange data with our partner countries, which enabled us to freeze the accounts of roughly 1,300 individuals in Russia. Our foreign counterparts, in turn, froze over 400 accounts held by Russian nationals suspected of engaging in such activities.

We are also advancing work in several new areas of responsibility, such as work with economically meaningful organisations. It includes depriving foreign holdings and companies of corporate rights.

One more area includes currency monitoring. I would like to highlight the responsible behaviour of most Russian exporters: with a standard of 40 percent, they sell approximately 70 percent, which is commendable. We are also witnessing a steady and significant increase in the share of the ruble in international settlements, as well as notable growth in trade in friendly nations’ currencies, and a reduction by approximately half with unfriendly states.

Vladimir Putin: Are these dollars, euros and pounds?

Yury Chikhanchin: Yes, their share has dropped significantly. There are still some deals, but in fact their number is decreasing.

Vladimir Putin: What exactly is netting?

Yury Chikhanchin: Netting is a mechanism where the exporter allows the importer to offset payments. Instead of the exporter receiving funds directly, the importer uses that amount to deliver goods in advance, settling the transaction domestically. It is essentially a form of clearing operation.

Vladimir Putin: But you monitor all of this, correct?

Yury Chikhanchin: Yes, though there are certain issues that I will touch on separately.

Regarding foreign currency monitoring, while our agency is not a currency oversight agency , we have been able to identify violations, including unfulfilled import contracts totalling around 7 billion rubles, which we are now working on jointly with the Federal Customs Service. We also detected illegal transfers of assets amounting to roughly 60 billion rubles. Altogether, these efforts have resulted in the return of approximately 130 billion rubles to the national economy.

Another issue is that not all foreign trade participants disclose their affiliated companies. We have identified around 250 such entities, with total transactions valued at about 460 billion rubles.

Given the growing involvement of individuals in shadow schemes, we are continuing our work through the International Financial Olympiad. You attended the third Olympiad and supported the creation of a broader movement for financial security.

Vladimir Putin: I signed your document.

Yury Chikhanchin: Thank you very much. We have now officially launched this international movement. Deputy Prime Minister Dmitry Chernyshenko has been appointed chair of the initiative with the consent of Prime Minister Mikhail Mishustin.

This year marks the fifth Olympiad. Following your recommendation, we have expanded to the regions. It will be held in Krasnoyarsk and will rotate among different regions in the future. While the first Olympiad included seven participating countries, the number grew to 12, then 19, 36, and now we have 40 countries registered to take part in the upcoming Olympiad, scheduled for late September or early October.

We are already conducting lessons in financial security and preliminary qualifying rounds. More than 5,000 Russian and foreign university and school students have signed up for the current elimination round. Actually, their number continues to increase.

Apart from the Olympiad itself, the programme includes a wide range of events: international forums, sports and cultural activities. Last year, children’s artwork from Siberia was exhibited; this year we are holding a national costume competition. There has also been widespread support for financial literacy quizzes and dictations. The movement has gained real momentum and continues to develop.

We warmly invite you to the fifth anniversary Olympiad in Krasnoyarsk this autumn.

Vladimir Putin: All right. Thank you very much.

Am I right in understanding that the use of gold bullion in financial settlements has increased significantly?

Yury Chikhanchin: Yes, it has increased substantially.

Vladimir Putin: By more than twofold, correct?

Yury Chikhanchin: Yes, although activity has dipped slightly recently. There is still a lack of regulation around gold transactions. We are now working closely with the Ministry of Finance and the Central Bank to introduce legislative changes, and I believe we will be able to make improvements. Currently, gold can be exported quite freely. The typical scheme involves buying gold in Russia with rubles, exporting it, selling it for foreign currency and converting the proceeds – that is where the profit lies. With gold prices at historic highs, the margins are very attractive.

Vladimir Putin: Gold prices have hit an all-time high.

Yury Chikhanchin: Yes, a very favourable margin.

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