Following only some of the money in Russia

The Russian state bodies and personnel assigned to implement the country's anti-moneylaundering (AML) policies seem to have allowed the Russian political leadership and its principal allies to move large shares of the wealth they have acquired during the Putin era abroad. Although some of this wealth was accumulated illegally, a great deal of it is the result of activity that is allowed in Russia but prohibited in most economically advanced countries, such as insider trading. As is the case with Russian criminal and regulatory enforcement agencies, the Russian Federal Monitoring Service (RosFinMonitoring)1 and other relevant state bodies selectively enforce AML policies, focusing on low-level and mid-level officials and businesspersons who do not enjoy high-level political patrons.Why Money Is Laundered and How It Is Related to CorruptionTraditionally, money laundering is an important element of the ability of corrupt government officials and their allies to profit from their political power-that is, officials use the process to treat the state as their own private property. In Russia, political and economic elites often act with impunity when they violate their country's laws, because they know that they will not be investigated or prosecuted for their illegal activities.Generally, money laundering is conceptually divided into three distinct stages or phases. According to the United Nations Office on Drugs and Crime, these three stages are placement, layering, and integration, but these are best viewed as one process. The placement stage represents the initial entry of the proceeds from crime into the financial system. This stage serves two purposes-it relieves the criminal of holding and guarding the large physical bulk of cash and places the money in the legitimate financial stream. Layering is the process of separating the capital from its illegal source. During the integration stage, the earnings are converted into apparently legitimate earnings. The placement stage is considered to be the riskiest, for it is then that the chances of raising suspicion are the greatest.2A working AML system should have the ability to detect illicit funds at each point in the process. To "follow the money," AML personnel must be able to operate domestically and internationally. When operating abroad, they normally must have good working relations with other financial intelligence units.3The Evolution of Russian Currency and AML PoliciesIn 1992, the Russian State Duma assigned the responsibility for the regulation and control of foreign currency to the Central Bank of the Russian Federation (RCB) pursuant to the Law on Hard Currency Regulation and Control.4 This piece of legislation was a framework law empowering the RCB to issue detailed rules covering transactions between Russians and foreign persons. The RCB is nominally independent from the executive branch, with foreign economic policy under the control of the Russian Ministry of Finance.Since the enactment of the Law on Hard Currency Regulation and Control, the volume of Russian trade has grown exponentially and governmental officials have become more familiar with international finance. This has led to fewer requirements in certain areas, decentralization in some regulatory responsibilities, and greater sophistication within the government on foreign economic relations. In recent years, the RCB's authority has become more limited, with the Russian governmental bodies responsible for collecting taxes and customs duties assuming responsibility for areas formerly under RCB auspices. Compared with the central banks in other countries, the RCB seems to have less autonomy. At times, it seems as if the Russian political leadership treats the RCB as if it were an executive body.Despite the growing internationalization of the finance sector, it was not until August 7, 2001, that Russia finally enacted a law making money laundering a criminal offense. …