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Canada equates Russia with Iran and DPRK: what does the tough decision of the Ministry of Finance mean?

Kseniya KapustynskaNews
Canada tightens financial control over Russian operations
Canada strengthens financial control over Russian operations

Canada has effectively equated Russia to the countries on the blacklist of the International Group on Combating Money Laundering (FATF) without waiting for a decision from the FATF itself. Now, any financial transactions related to Russia will be considered as high-risk transactions in Canada. Iran and the DPRK are officially on the FATF blacklist.

The relevant requirement was introduced by a directive issued by the Deputy Prime Minister and Minister of Finance of Canada Chrystia Freeland, the Ministry of Finance of Ukraine reported on March 8. The Ministry of Finance notes that the directive came into force on February 24, 2024, two years after the start of Russia's full-scale invasion of Ukraine.

"The directive requires that every financial transaction related to Russia, regardless of its size, be considered a high-risk transaction and establishes corresponding enhanced obligations for due diligence, monitoring, and record-keeping of such financial transactions. In other words, Canada, without waiting for the completion of the search for consensus within the FATF, has equated Russia with the countries on the FATF blacklist," the Ukrainian Ministry of Finance said.

The Financial Intelligence Unit in Canada (FINTRAC) has also published official instructions explaining the requirements of the directive. Thus, financial transactions originating from or destined for Russia may include but are not limited to:

  • electronic funds transfers, money orders, or other transfers that include a Russian origin or destination address;
  • activities of representatives of the Russian government (e.g., transactions on the bank account of the Russian Embassy in Canada);
  • receiving Russian rubles as a deposit to an account or for a virtual currency transaction;
  • conducting a foreign currency or virtual currency exchange transaction involving Russian rubles.

"We welcome Canada's strengthening of controls over financial transactions related to Russia. To date, the directives of the Minister of Finance of Canada under the Anti-Money Laundering and Counter-Terrorist Financing Act apply to transactions with three countries – North Korea, Iran, and, since February 24 this year, Russia. That is, Canada, without waiting for the completion of the search for consensus within the FATF on the issue of sanctioning Russia, has equated Russia with the countries on the FATF blacklist," said Ukrainian Finance Minister Serhii Marchenko.

As reported by OBOZ.UA, in late February 2014, the FATF plenary meeting confirmed the potential risks of the Russian Federation to the international financial system. The suspension of Russia's membership in the organization was extended, but the aggressor country has not yet been blacklisted by the FATF, despite Russia's growing ties with North Korea and Iran.

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