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In 2023, 2.09 trillion rubles of criminal proceeds were laundered, that is, legalized for open use, in Russia, which is equivalent to 1.2% of GDP. This is stated in the scientific article “Assessing the Scale of Money Laundering in Russia,” published in the latest issue of the peer-reviewed scientific journal “Problems of Economics” (RBK has reviewed it). This amount was mainly formed by economic crimes, fraud, and drug trafficking, the authors indicated. The estimate of these scientists, who work at the Astrakhan State Technical University, significantly exceeds the official data: thus, according to the Bank of Russia, in 2023, about 30.8 billion rubles were illegally transferred abroad, 59.5 billion rubles were cashed.
Thus, the level of sensitivity of the national anti-money laundering system to money laundering is at a level of slightly more than 4% of the estimated volume of laundered criminal proceeds, the authors of the article believe.
RBC sent a request to Rosfinmonitoring.
Total income from crimes
In order to assess the scale of money laundering in Russia, scientists relied on two assumptions, namely:
* the composition of crimes that form criminal income includes all predicate crimes (i.e., income from which is subject to laundering), except for violent crimes (i.e., crimes against the person)
For example, the international Financial Action Task Force (FATF) classifies the main types of crimes characterized by money laundering as illegal trafficking in drugs, tobacco products, jewelry, human trafficking, piracy, corruption, fraud, and illegal transactions with digital assets. At the same time, FATF typologies do not cover such crimes as robberies, burglaries, murders, and assaults: it can be assumed that the group's experts consider the profitability of these types of crimes to be low and, accordingly, their involvement in money laundering to be weak, the article states.
* criminal income from the arithmetic mean predicate crime is equal to the identified average damage, based on data from the Ministry of Internal Affairs of Russia
Until 2022, the Ministry of Internal Affairs published information on damage from various categories of crimes: all registered; serious and especially serious; economic, including tax; environmental. However, since 2022, only information on total damage and damage from serious and especially serious crimes has remained publicly available, the authors of the article indicate.
In total, about 998 thousand crimes were solved in 2023, of which 199 thousand were crimes against the person, which the authors decided not to take into account in the calculations, the article notes with reference to data from the Ministry of Internal Affairs. The total damage from solved predicate crimes is estimated by the department at 588 billion rubles, thus, on average, one such crime caused damage in the amount of 735.8 thousand rubles, the authors calculated.
However, the number of registered crimes (including both solved, i.e. investigated, and not) was higher and reached 1.947 million, according to the Ministry of Internal Affairs data: https://media.mvd.ru/files/application/5095078
The authors of the article cite a number of studies claiming that the actual number of crimes in Russia is many times higher than the official data - in particular, the literature contains an estimate that in 2023, actual crime was 3.5 times higher than registered. Taking the coefficient 3.5 as a basis, the authors took the number of registered predicate crimes (about 1.6 million in 2023) and derived an estimate of the actual number of such crimes - about 5.6 million. Multiplying this figure and the average amount of damage, they came to the conclusion that the total amount of criminal proceeds actually received by offenders in 2023 amounted to 4.1 trillion rubles (or 2.4% of GDP).
Identifying the damage from the predicate crimes specified in the study with the income from them is a rather bold assumption, says Ekaterina Avdeeva, member of the General Council, head of the expert council on criminal-legal policy and execution of judicial acts of Delovaya Rossiya. "If someone's iPhone is stolen, the damage will amount to 100 thousand rubles, but the criminal will receive a maximum of 10 thousand. And thefts are a very significant part of criminal income, according to this study," the expert points out. In addition, for example, in economic crimes, the amount of damage depends to a high degree on the subjective assessment of the investigation - sometimes it includes "lost profit" (that is, the benefit lost due to the offense), Avdeeva points out.
Calculation of "laundered" funds
To determine the volume of laundered income, the authors of the article used the indicator - the specific weight proposed by Australian criminologist professor John Walker. For each of the predicate crimes, using Australia as an example, he identified an expert assessment of two coefficients - the share of criminal proceeds in the total cost of damage from crimes of this type and the share of criminal proceeds subject to laundering (by combining them, you can actually get one coefficient that allows you to deduce the volume of laundered criminal proceeds from the cost of damage). This indicator was proposed in 1995 and updated in 2006.
The damage for each predicate crime in Russia is derived in the work as an estimate of the actual number of such crimes, multiplied by the previously obtained estimate of the arithmetic mean damage from solved registered crimes, according to the Ministry of Internal Affairs. Then, the above coefficients are applied to these amounts of damage, and thus an estimate of the volume of laundered proceeds for each predicate crime is obtained.
The calculation results showed that in 2023, 2.09 trillion rubles of criminal proceeds were laundered in Russia, which is equivalent to 1.2% of the country's GDP. The largest part of this amount was provided by economic crimes - within their framework, according to the authors of the article, 872 billion rubles of criminal proceeds were legalized. In second place is fraud (715 billion rubles), in third place are crimes related to illegal drug trafficking (315 billion rubles). As a result of thefts, 120 billion rubles were laundered, corruption crimes - 60 billion rubles, crimes in the field of computer information - 5.2 billion rubles, robbery - 4.6 billion rubles. At the same time, illegal drug trafficking and fraud in Russia account for 43.8% of registered crimes that generate illegal income, the authors of the article note. "They are increasingly competing with computer crimes, the impact of which on the formation of criminal income has been little studied, its share is estimated to be low, which affected the final estimate of the share of money laundering in the total volume of criminal income (the [Walker] coefficients were presented before such crimes became widespread)," the material follows.
Are the estimates reliable
The estimate of the scale of money laundering in the amount of 2 trillion rubles looks plausible if we take into account the wide range of operations covering not only the banking sector, but also various shadow and cryptocurrency mechanisms, says Dmitry Grigoriadis, head of the Grigoriadis group bar association and expert at the Business Against Corruption public procedures center. "For example, the Central Bank sees only a small part of illegal financial transactions. This is due to the fact that existing monitoring and control tools are focused on traditional banking channels. And criminal schemes are increasingly using more complex forms, including cryptocurrency transfers, offshore accounts and shell companies,” he lists.
In particular, banking systems focused on monitoring suspicious account transactions are unable to identify “shell” companies through which criminal proceeds are distributed to different sectors, the expert believes.
The amount of 2 trillion rubles itself seems overstated, senior partner of Bartolius Law Firm Yuliy Tay is skeptical. “Any methodologies for identifying the volume of laundered funds, on the one hand, are acceptable for research and criminological purposes in the case of long-term monitoring, but are not reliable enough in each specific case due to the very high level of latency [hidden nature] of this type of crime, which is sometimes almost inseparable from normal business turnover, and sometimes is simply part of it,” the expert emphasizes. However, the results of the study may be of interest in dynamics in order to track the trend year by year, Tay believes.
In Russia, we have to acknowledge a significant difference between registered and actual crime, and the most latent crime should be recognized as corruption - in fact, the main predicate element in relation to money laundering, believes lawyer, managing partner of ZE Lawgic Legal Solutions Ruslan Zafesov. "In order to reduce the scale of legalization of criminal proceeds or completely defeat money laundering, first of all, it is necessary to defeat corruption," he is sure.
At the same time, the total costs associated with the fight against crime should not exceed the total damage from it, emphasizes Boris Kopeikin, chief economist of the P.A. Stolypin Institute for Growth Economics.
"According to the annual report of the Central Bank for last year, more than 3% of all companies and individual entrepreneurs operating in Russia could raise questions - they were classified as "medium" and "high" risk. This is a lot," he believes.
In addition, mistakes are also likely. “Often, under Federal Law 115 [the “anti-money laundering” law], accounts of bona fide companies and individual entrepreneurs can be blocked. Honest businesses can and should challenge such decisions, but this takes time and leads to financial losses. And although there are no reliable estimates of business losses, they are clearly large,” the expert says.
How money laundering is fought in Russia
In Russia, Rosfinmonitoring is responsible for combating money laundering and cashing out criminal proceeds. The service interacts with executive authorities, law enforcement agencies, and market participants who conduct financial transactions for individuals and companies or have data on their transactions. These are banks, insurers, brokers, pawnshops, investment and pension funds, microfinance organizations, bookmakers, postal operators, realtors, and notaries. If they detect suspicious transactions or deals, they are required to inform Rosfinmonitoring about them. In addition to collecting and analyzing information, the financial intelligence service also conducts financial investigations. In its annual reports, Rosfinmonitoring does not provide precise estimates of the total volume of money laundering in Russia; each year it selectively discloses information on various channels for conducting suspicious transactions aimed at legalizing funds.
For example, in 2023, the service identified ten shadow platforms that were engaged in illegal cashing. The total volume of transactions on them was estimated at 28 billion rubles. For comparison: in 2022, Rosfinmonitoring stopped the work of eight shadow platforms with a total volume of more than 21 billion rubles. “The main consumers of shadow platforms’ services remain the construction and wholesale trade sectors, including online trade,” the financial intelligence service noted.
Rosfinmonitoring also monitors the legality of the use of budget funds and state defense procurement funds, conducts anti-corruption investigations, and prevents the laundering of proceeds from illegal arms and drug trafficking. The service's report for 2023 provides the volume of identified money laundering transactions in three sectors of the economy, in addition to banks.
Timber industry complex — 400 million rubles.
Housing and utilities — 430 million rubles.
Fuel and energy complex — 386 million rubles.
According to the Central Bank, in 2023, the volume of suspicious transactions in banks and outside the banking sector as a whole decreased by 12%. The Central Bank provides data in absolute terms only for transactions carried out through credit institutions: about 30.8 billion rubles were transferred abroad, 59.5 billion rubles were cashed. The volume of such dubious transactions decreased by 15 and 11% compared to 2022. In its reports, the Central Bank also mentions high-risk transit transactions that precede cashing out through banks: these include, for example, the sale of cash proceeds by travel companies or transactions involving the purchase of scrap metal. The volume of such transactions is not disclosed.
To reduce the risks of dubious transactions in the banking sector, the Central Bank's Know Your Client (KYC) platform has been in effect in Russia since July 1, 2022. All banks are connected to it, and they receive data from the Central Bank on a daily basis on the risk level of all their legal entity and individual entrepreneur clients. After the launch of the KYC platform, both the Central Bank and Rosfinmonitoring indicated that the main channel for cashing out money was the cards of individuals, including front men (drops). In 2023, 76% of cashed funds (44.9 billion rubles) were issued to individuals. According to the results of the first half of 2024, the share of individuals in dubious cash-out transactions jumped to 81% (15.9 billion rubles). There is no talk yet about extending the ZSK platform to transactions of individuals, the Central Bank and Rosfinmonitoring said.
The agencies, together with banks, also began testing the Know Your Crypto Client service in the spring of this year. It is expected that in the future it will allow credit institutions to identify links between clients' transactions with cryptocurrency and regular (fiat) money.
Source
Thus, the level of sensitivity of the national anti-money laundering system to money laundering is at a level of slightly more than 4% of the estimated volume of laundered criminal proceeds, the authors of the article believe.
RBC sent a request to Rosfinmonitoring.
Total income from crimes
In order to assess the scale of money laundering in Russia, scientists relied on two assumptions, namely:
* the composition of crimes that form criminal income includes all predicate crimes (i.e., income from which is subject to laundering), except for violent crimes (i.e., crimes against the person)
For example, the international Financial Action Task Force (FATF) classifies the main types of crimes characterized by money laundering as illegal trafficking in drugs, tobacco products, jewelry, human trafficking, piracy, corruption, fraud, and illegal transactions with digital assets. At the same time, FATF typologies do not cover such crimes as robberies, burglaries, murders, and assaults: it can be assumed that the group's experts consider the profitability of these types of crimes to be low and, accordingly, their involvement in money laundering to be weak, the article states.
* criminal income from the arithmetic mean predicate crime is equal to the identified average damage, based on data from the Ministry of Internal Affairs of Russia
Until 2022, the Ministry of Internal Affairs published information on damage from various categories of crimes: all registered; serious and especially serious; economic, including tax; environmental. However, since 2022, only information on total damage and damage from serious and especially serious crimes has remained publicly available, the authors of the article indicate.
In total, about 998 thousand crimes were solved in 2023, of which 199 thousand were crimes against the person, which the authors decided not to take into account in the calculations, the article notes with reference to data from the Ministry of Internal Affairs. The total damage from solved predicate crimes is estimated by the department at 588 billion rubles, thus, on average, one such crime caused damage in the amount of 735.8 thousand rubles, the authors calculated.
However, the number of registered crimes (including both solved, i.e. investigated, and not) was higher and reached 1.947 million, according to the Ministry of Internal Affairs data: https://media.mvd.ru/files/application/5095078
The authors of the article cite a number of studies claiming that the actual number of crimes in Russia is many times higher than the official data - in particular, the literature contains an estimate that in 2023, actual crime was 3.5 times higher than registered. Taking the coefficient 3.5 as a basis, the authors took the number of registered predicate crimes (about 1.6 million in 2023) and derived an estimate of the actual number of such crimes - about 5.6 million. Multiplying this figure and the average amount of damage, they came to the conclusion that the total amount of criminal proceeds actually received by offenders in 2023 amounted to 4.1 trillion rubles (or 2.4% of GDP).
Identifying the damage from the predicate crimes specified in the study with the income from them is a rather bold assumption, says Ekaterina Avdeeva, member of the General Council, head of the expert council on criminal-legal policy and execution of judicial acts of Delovaya Rossiya. "If someone's iPhone is stolen, the damage will amount to 100 thousand rubles, but the criminal will receive a maximum of 10 thousand. And thefts are a very significant part of criminal income, according to this study," the expert points out. In addition, for example, in economic crimes, the amount of damage depends to a high degree on the subjective assessment of the investigation - sometimes it includes "lost profit" (that is, the benefit lost due to the offense), Avdeeva points out.
Calculation of "laundered" funds
To determine the volume of laundered income, the authors of the article used the indicator - the specific weight proposed by Australian criminologist professor John Walker. For each of the predicate crimes, using Australia as an example, he identified an expert assessment of two coefficients - the share of criminal proceeds in the total cost of damage from crimes of this type and the share of criminal proceeds subject to laundering (by combining them, you can actually get one coefficient that allows you to deduce the volume of laundered criminal proceeds from the cost of damage). This indicator was proposed in 1995 and updated in 2006.
The damage for each predicate crime in Russia is derived in the work as an estimate of the actual number of such crimes, multiplied by the previously obtained estimate of the arithmetic mean damage from solved registered crimes, according to the Ministry of Internal Affairs. Then, the above coefficients are applied to these amounts of damage, and thus an estimate of the volume of laundered proceeds for each predicate crime is obtained.
The calculation results showed that in 2023, 2.09 trillion rubles of criminal proceeds were laundered in Russia, which is equivalent to 1.2% of the country's GDP. The largest part of this amount was provided by economic crimes - within their framework, according to the authors of the article, 872 billion rubles of criminal proceeds were legalized. In second place is fraud (715 billion rubles), in third place are crimes related to illegal drug trafficking (315 billion rubles). As a result of thefts, 120 billion rubles were laundered, corruption crimes - 60 billion rubles, crimes in the field of computer information - 5.2 billion rubles, robbery - 4.6 billion rubles. At the same time, illegal drug trafficking and fraud in Russia account for 43.8% of registered crimes that generate illegal income, the authors of the article note. "They are increasingly competing with computer crimes, the impact of which on the formation of criminal income has been little studied, its share is estimated to be low, which affected the final estimate of the share of money laundering in the total volume of criminal income (the [Walker] coefficients were presented before such crimes became widespread)," the material follows.
Are the estimates reliable
The estimate of the scale of money laundering in the amount of 2 trillion rubles looks plausible if we take into account the wide range of operations covering not only the banking sector, but also various shadow and cryptocurrency mechanisms, says Dmitry Grigoriadis, head of the Grigoriadis group bar association and expert at the Business Against Corruption public procedures center. "For example, the Central Bank sees only a small part of illegal financial transactions. This is due to the fact that existing monitoring and control tools are focused on traditional banking channels. And criminal schemes are increasingly using more complex forms, including cryptocurrency transfers, offshore accounts and shell companies,” he lists.
In particular, banking systems focused on monitoring suspicious account transactions are unable to identify “shell” companies through which criminal proceeds are distributed to different sectors, the expert believes.
The amount of 2 trillion rubles itself seems overstated, senior partner of Bartolius Law Firm Yuliy Tay is skeptical. “Any methodologies for identifying the volume of laundered funds, on the one hand, are acceptable for research and criminological purposes in the case of long-term monitoring, but are not reliable enough in each specific case due to the very high level of latency [hidden nature] of this type of crime, which is sometimes almost inseparable from normal business turnover, and sometimes is simply part of it,” the expert emphasizes. However, the results of the study may be of interest in dynamics in order to track the trend year by year, Tay believes.
In Russia, we have to acknowledge a significant difference between registered and actual crime, and the most latent crime should be recognized as corruption - in fact, the main predicate element in relation to money laundering, believes lawyer, managing partner of ZE Lawgic Legal Solutions Ruslan Zafesov. "In order to reduce the scale of legalization of criminal proceeds or completely defeat money laundering, first of all, it is necessary to defeat corruption," he is sure.
At the same time, the total costs associated with the fight against crime should not exceed the total damage from it, emphasizes Boris Kopeikin, chief economist of the P.A. Stolypin Institute for Growth Economics.
"According to the annual report of the Central Bank for last year, more than 3% of all companies and individual entrepreneurs operating in Russia could raise questions - they were classified as "medium" and "high" risk. This is a lot," he believes.
In addition, mistakes are also likely. “Often, under Federal Law 115 [the “anti-money laundering” law], accounts of bona fide companies and individual entrepreneurs can be blocked. Honest businesses can and should challenge such decisions, but this takes time and leads to financial losses. And although there are no reliable estimates of business losses, they are clearly large,” the expert says.
How money laundering is fought in Russia
In Russia, Rosfinmonitoring is responsible for combating money laundering and cashing out criminal proceeds. The service interacts with executive authorities, law enforcement agencies, and market participants who conduct financial transactions for individuals and companies or have data on their transactions. These are banks, insurers, brokers, pawnshops, investment and pension funds, microfinance organizations, bookmakers, postal operators, realtors, and notaries. If they detect suspicious transactions or deals, they are required to inform Rosfinmonitoring about them. In addition to collecting and analyzing information, the financial intelligence service also conducts financial investigations. In its annual reports, Rosfinmonitoring does not provide precise estimates of the total volume of money laundering in Russia; each year it selectively discloses information on various channels for conducting suspicious transactions aimed at legalizing funds.
For example, in 2023, the service identified ten shadow platforms that were engaged in illegal cashing. The total volume of transactions on them was estimated at 28 billion rubles. For comparison: in 2022, Rosfinmonitoring stopped the work of eight shadow platforms with a total volume of more than 21 billion rubles. “The main consumers of shadow platforms’ services remain the construction and wholesale trade sectors, including online trade,” the financial intelligence service noted.
Rosfinmonitoring also monitors the legality of the use of budget funds and state defense procurement funds, conducts anti-corruption investigations, and prevents the laundering of proceeds from illegal arms and drug trafficking. The service's report for 2023 provides the volume of identified money laundering transactions in three sectors of the economy, in addition to banks.
Timber industry complex — 400 million rubles.
Housing and utilities — 430 million rubles.
Fuel and energy complex — 386 million rubles.
According to the Central Bank, in 2023, the volume of suspicious transactions in banks and outside the banking sector as a whole decreased by 12%. The Central Bank provides data in absolute terms only for transactions carried out through credit institutions: about 30.8 billion rubles were transferred abroad, 59.5 billion rubles were cashed. The volume of such dubious transactions decreased by 15 and 11% compared to 2022. In its reports, the Central Bank also mentions high-risk transit transactions that precede cashing out through banks: these include, for example, the sale of cash proceeds by travel companies or transactions involving the purchase of scrap metal. The volume of such transactions is not disclosed.
To reduce the risks of dubious transactions in the banking sector, the Central Bank's Know Your Client (KYC) platform has been in effect in Russia since July 1, 2022. All banks are connected to it, and they receive data from the Central Bank on a daily basis on the risk level of all their legal entity and individual entrepreneur clients. After the launch of the KYC platform, both the Central Bank and Rosfinmonitoring indicated that the main channel for cashing out money was the cards of individuals, including front men (drops). In 2023, 76% of cashed funds (44.9 billion rubles) were issued to individuals. According to the results of the first half of 2024, the share of individuals in dubious cash-out transactions jumped to 81% (15.9 billion rubles). There is no talk yet about extending the ZSK platform to transactions of individuals, the Central Bank and Rosfinmonitoring said.
The agencies, together with banks, also began testing the Know Your Crypto Client service in the spring of this year. It is expected that in the future it will allow credit institutions to identify links between clients' transactions with cryptocurrency and regular (fiat) money.
Source
