The Financial Crimes Enforcement Network (FinCEN) on Thursday issued an advisory offering red flag indicators of kleptocracy and foreign corruption, noting Russia as a country of “particular concern.”
The advisory, targeted at financial institutions, follows guidance issued by FinCEN last month warning of Russian sanctions evasion attempts. The division of the Treasury Department cited the country’s actions in Ukraine in stressing the importance of its latest message.
“Russia’s further invasion of Ukraine is a yet another example of how a kleptocracy like Russia—a country whose government has been characterized for years by corruption, money laundering, malign influence, sanctions evasions, and armed interventions abroad—harms not only its own citizens, but those living beyond its borders,” said FinCEN Acting Director Himamauli Das in a press release. “Financial institutions play a crucial role in identifying corrupt activity and associated money laundering on the part of foreign public officials and should remain vigilant and promptly report suspicious financial activity.”
Among the red flag indicators FinCEN highlighted included:
- Transactions involving services provided to state-owned companies or public institutions by companies registered in high-risk jurisdictions;
- Transactions involving public officials related to high-value assets (e.g., real estate or luxury goods);
- Use of third parties to shield the identity of foreign public officials seeking to hide the origin or ownership of funds;
- Transactions involving payments that do not match the total amounts set out in the underlying documentation; and
- Transactions involving fictitious email addresses and false invoices to justify payments.
FinCEN acknowledged these corrupt actions extend well beyond Russia. The agency cited the Odebrecht bribery scandal in Brazil and the recent sanctioning of individuals in Belarus and El Salvador accused of misappropriating public assets as examples of the many forms corruption can take.
FinCEN’s advisory is in line with President Joe Biden’s strategy on countering corruption announced in December.
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