What are the problems specific to Russia?

• First of all, with any purportedly privately-held Russian company, there is the risk that it is, in reality, government-controlled or owned. This mean that senior officers of these specific companies are, by any acceptable definition, PEPs. Of course, ascertaining whether a private Russian company is government-owned is often no easy task. Do you have sources who you task with these questions? American businesses often engage former or retired agents of the Federal Bureau of Investigation (FBI) who have long-standing Russian sources in place to find these answers.  In-country resources may be your only effective method of really knowing who you are dealing with in Russia.

• Second, there are a large number of former members of the Federal Security Service (Federalnaya Sluzhba Bezopasnost, or FSB). or its predecessor, the KGB, working within the private sector. The individuals acting as leaders maintain a relationship with both their former agency, and other ministries within the present government. As such,  they could undertake activities on behalf of either, meaning that government control issues can be present.

Therefore, it would be prudent to enquire, at account opening, about the prior work experience of the client, expecially prior to 1991, and to independently verify the answers you receive. The assassination, last year, of the chairman of the Central Bank of Russia is believed to be due to his ongoing investigation of large funds transfers from Russia, conducted on behalf of corrupt government officials. Should you be unwittingly banking a client who is involved in this illicit operation, the subsequent reputation damage through media exposure could cause legitimate customers to move their business elsewhere.

As with any risk-based programme, evaluate the new business carefully, and satisfy yourself that the client is not  an unacceptable risk.