Russia is waging a valiant defense against being added to the FATF's "black list" at the plenary meeting next month.
Officials from the Kremlin are warning that they will cancel low-cost oil and defense agreements with nations like India if Russia is added to the FATF's list of pariah nations, which also includes North Korea and Iran, at the June plenary.
The international financial crime watchdog excluded Russia earlier this year when FATF suspended it, marking the first time the group has ever done so. At the time, the Russian ambassador to the US referred to it as a dangerous step that would result in the collapse of the international system for countering the financing of terrorism.
By being placed on a blacklist, FATF member nations, banks, investment firms, and payment processors would be required to do increased due diligence and, in the worst situations, take countermeasures to safeguard the global financial system.
Russia is concerned about being included to the "grey list" of countries, which also includes Gibraltar and the United Arab Emirates and, up until last year, Malta.
An official with knowledge of the situation said that Russian officials told India that being put on the grey watchlist would make it difficult to fulfill agreements for arms supplies and other projects to India. Since the start of the conflict in Ukraine, Moscow has relied on India to support it at sessions of the watchdog.
India enjoyed "special credibility" inside the FATF, according to a document published by Russia in early May, and it was regretful that Delhi didn't speak out against Russia's suspension.
Russian is exerting all of its diplomatic and commercial clout to persuade India not to vote for blacklisting at the FATF plenary next month in order to avoid further exclusion from the international banking system.
Russia warned that the following projects with India would be in jeopardy if the FATF enacted further regulations:
- Technical cooperation in the defense sector and Russian exports of weapons and military hardware to India
- Russian proposals for new joint aviation projects presented at the Aero India 2023 exhibition in February
- Technology and energy cooperation at India's Kudankulam nuclear power plant
- A cargo transportation agreement between Russian Railways' RZD Logistics and the Container Corporation of India
According to Bloomberg, the warnings came from a Russian state agency, which warned its Indian counterparts of a series of unanticipated and negative outcomes for cooperation in defense, energy, and transportation if the FATF adopted further sanctions against Russia.
In May, the Kremlin agency pleaded with India to "vocally" oppose any efforts by Ukraine to put Russia on the "black list," warning that even inclusion on the more moderate "grey list" would create problems.
Without mentioning that it was in response to Putin's invasion of Ukraine, the Russians referred to the FATF's unprecedented suspension of their nation as politicized and illegitimate.
Serhiy Marchenko, the finance minister of Ukraine, said in a statement about Russian lobbying before the FATF meeting: "Russia’s bullying behaviour is concerning but unsurprising. When faced with hard evidence of noncompliance with the FATF standards, Russia turned to blackmailing and political pressure."
According to Bloomberg, the strategic alliance with India is particularly delicate in the areas that Russia identified as being at risk. Russia is India's top supplier of weapons, but due to a lack of a payment method that doesn't violate US sanctions, defense deliveries have paused.
Following the imposition of a price cap by the US and its allies and Europe's rejection of supplies, India has also snatched up inexpensive Russian oil.
At the G7 summit in Japan last week, Indian Prime Minister Narendra Modi had his first in-person encounter with Ukrainian President Volodymyr Zelenskiy.
The meeting heightened concerns about India's potential vote in the FATF plenary, despite the fact that there are currently no signs that Delhi has shifted away from its previous support for Putin.
Other nations on the "grey list" of the FATF include Albania, Turkey, and South Africa. The IMF discovered in 2021 that being placed on the grey list, which entails stricter monitoring standards, causes a "large and statistically significant reduction in capital inflows."
At the same time, FATF stated that despite its suspension, Moscow remained "accountable" for upholding the organization's principles and that the group will review whether to lift or change the limits at each plenary meeting.
By fLEXI tEAM