Russia is lobbying nations in eastern and southern Africa in an attempt to join a regional anti-money laundering group as an observer.
The Kremlin wants to obtain observer status at the Eastern and Southern Africa Anti-Money Laundering Group by this fall, according to people familiar with the matter and documents seen by Bloomberg. It aims to gather information and influence international decision-making before a renewed push by Ukraine and its allies to further isolate Russia from the global financial system.
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The Kremlin’s financial monitoring unit, Rosfinmonitoring, confirmed in a statement provided by email that Russia applied to join the ESAAMLG as an observer. The African group is an associate member of the Financial Action Task Force, or FATF — the global financial watchdog that suspended Russia after its invasion of Ukraine. Moscow has since been lobbying countries to avoid further penalties.
“The presence of Russian companies on the African continent — including the financial sector — is growing, economic ties are expanding,” the agency said in a statement. “We should also take into account our traditionally productive relations with African countries, which we inherited from the USSR.”
Russia has made inroads on the continent in recent years in part through the Wagner Group, which deployed mercenaries to about half a dozen countries and helped revive Cold War-era ties. The Kremlin has signaled that it will take a more active role in those relationships after the death last month of Wagner founder Yevgeny Prigozhin.
Russia was suspended from the FATF after its invasion of Ukraine and has been lobbying countries to avoid further penalties. Moscow has so far avoided being put on the body’s “blacklist” and other penalties, but fears a renewed push before a plenary meeting scheduled for October, Bloomberg previously reported.
Russia has been able to adapt and get around some of the sanctions imposed on its economy and trade by the US and the European Union, but it has done so at a considerable cost. Its budget remains under pressure from the financial drain caused by President Vladimir Putin’s war.
Regional bodies such as the ESAAMLG subscribe to global standards on combating dirty money set by the Paris-based FATF.
The ESAAMLG has 20 member countries, including South Africa, Mauritius and Tanzania, as well as observers including the Commonwealth Secretariat, the International Monetary Fund, the US and the UK. Britain and the US have supported the organisation since it was established in 1999, the group’s website says.
Late last month, Ukraine’s state financial monitoring service wrote to senior officials in the government of Botswana, which presided over the ESAAMLG at the time, urging the group to take into account Moscow’s actions that led to its suspension from the FATF when making “relevant decisions,” according to one of the documents.
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‘Procedures to be followed’
Kenya has since taken over chairing the anti-money laundering body. The government suggested that Russia’s application had yet to be considered.
“This matter was suspended from the agenda because there are procedures to be followed, first in the application and second to bring in the agenda,” Kenya Treasury Secretary Njuguna Ndung’u told Bloomberg in a text message. “It was not discussed.”
Designation on the FATF’s blacklist alongside the likes of North Korea and Iran obliges FATF member states as well as banks, investment houses and payment-processing companies to conduct enhanced due diligence and in the most serious cases take counter-measures to protect the international financial system.
About 25 other countries are on the “gray list,” including Turkey, South Africa and the United Arab Emirates. A report by the IMF in 2021 found that this penalty, which involves closer monitoring requirements, results in a “large and statistically significant reduction in capital inflows.”
Ukraine and some of its allies will continue to push for Russia’s inclusion on the lists and for other actions that go beyond its FATF membership suspension, as Moscow’s actions show that it’s still able to interact with the organisation in spite of that measure, one of the people said.
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