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Improving the internal control to meet the AML/CFT requirements: Some recommendations to the Russian commercial banks

Vol. 25, Iss. 4, APRIL 2019

Received: 1 October 2018

Received in revised form: 14 January 2019

Accepted: 28 January 2019

Available online: 26 April 2019

Subject Heading: Banking

JEL Classification: G21, G28

Pages: 778–788

https://doi.org/10.24891/fc.25.4.778

Evlakhova Yu.S. Rostov State University of Economics (RSUE), Rostov-on-Don, Russian Federation
evlahova@yandex.ru

https://orcid.org/0000-0002-2561-6165

Stepanenko A.V. Rostov State University of Economics (RSUE), Rostov-on-Don, Russian Federation
Stepanenko_1393@mail.ru

ORCID id: not available

Subject This article examines the interrelation between common problems of internal control in the sphere of anti-money laundering and combating the financing of terrorism (AML/CFT) in Russian banks and various types of infringement of anti-money laundering legislation.
Objectives The article aims to develop recommendations on improvement of internal control in the sphere of AML/CFT.
Methods For the study, we used the methods of logic, analytical, and statistical analyses.
Results The article defines common problems of bank internal control in counteracting the anti-money laundering and the main types of violations of Russian banks that resulted in the revocation of licenses. The article also reveals a significant reduction in the number of violations over the last three years and shows the change of known schemes of illegal operations by new ones.
Conclusions The article concludes that improvement of the legislative base, timely and reasonable changes in the organization of internal control activities in commercial banks will help turn internal control into an effective management tool. As a result, these measures will increase the profitability and safety of banks.

Keywords: banking sector, legalization, mandatory control, questionable transaction, anti-money laundering

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