FATF Status

Belarus is not on the FATF List of Countries that have been identified as having strategic AML deficiencies.

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Belarus was undertaken in 2019. According to that Evaluation, Belarus was deemed Compliant for 12 and Largely Compliant for 25 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 5 of the Effectiveness  & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Belarus was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Belarus is not a major financial center. Corruption and illegal narcotics trafficking are primary sources of illicit proceeds. Economic decision-making in Belarus is highly concentrated within the top levels of government and, ultimately, in the presidency. The concentration of power in the hands of the presidency and the lack of a system of checks and balances among the various branches of government are the greatest hindrances to the rule of law and transparency of governance. Government financial institutions have little autonomy, and the financial sector is not sufficiently transparent and accountable. The substantial liberalization of the national currency exchange rate policies, coupled with tighter monetary policies, contributed to a decreased use of the dollar and euro in 2015 and significantly curbed foreign currency cash transactions’ avoidance of the banking system. That also helped reduce the potential for off- book cash transactions and underground markets in 2015.

Trade-based money laundering occurs primarily between Russian and Belarusian businesses. Front companies are often involved and funds sometimes transferred for products that are never delivered. The Belarusian financial intelligence unit (FIU) noted increased efforts in 2015 to transfer funds from Russia to third countries via the Belarusian banking system, as an apparent consequence of Western sanctions against Russia.

There are many casinos, especially in the capital, Minsk, and foreign ownership is allowed. In 2013, the government introduced an automatic system to register winnings in legal gambling, which enables the real time registration of winnings. In 2014, the government passed various resolutions to tighten internal control in the gaming industry and issued risk management recommendations for such businesses. In 2015, the government upgraded and streamlined the system of registering financial operations in gambling via the introduction of an electronic data exchange.

Since 2006, Belarus has been the subject of numerous U.S. sanctions. In 2011, the United States reauthorized the Belarus Democracy and Human Rights Act of 2004, which includes a package of sanctions expanding the list of Belarusian officials and law enforcement representatives subject to visa bans and financial restrictions. The United States also extended limitations on trade with Belarus under the International Emergency Economic Powers Act.  In May 2012, the U.S. Treasury designated Belarus-based JSC CredexBank (renamed JSC InterPayBank) as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act.

In March 2015, the U.S. Secretary of State decided to terminate sanctions imposed in 2011 on Belarusneft, a state-owned Belarussian energy company, for its involvement in the Iranian petroleum sector because the company is no longer engaging in sanctionable activity. In October 2015, the Department of the Treasury, in consultation and coordination with the Department of State, authorized general license transactions involving nine Belarusian entities pursuant to Executive Order 13405.  The authorization expires on April 30, 2016, unless extended or revoked. The United States took this step in light of the positive move by the Belarusian government to release six political prisoners in August 2015.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           37

World Governance Indicator – Control of Corruption             32

Corruption is present at all government levels in Belarus; customs, public procurement and construction are particularly vulnerable sectors. Companies are likely to face discrimination and corruption in public procurement in favor of state-owned enterprises, and making informal payments or giving gifts to secure government contracts are common practices when doing business in the country. While petty corruption is relatively limited, high level corruption occurs with impunity. The Criminal Code of the Republic of Belarus criminalizes attempted corruption, extortion, active and passive bribery, bribery of foreign officials and money laundering, but anti-corruption regulations are vague and require improvement. In addition, anti-corruption laws have been poorly enforced and officials engage in corruption with impunity. The legal status of facilitation payments is uncertain. For further information - GAN Integrity Business Anti-Corruption Portal

Over the last year, the Lukashenka regime has continued to expand its campaign of repression and violations of human rights stemming from the fraudulent presidential elections in August 2020. In so doing, authorities have significantly worsened the business and investment climate in Belarus, seen Belarus expelled or suspended from international development organizations, severed ties with most of Belarus’ biggest trading partners, and become subject to numerous rounds of sanctions by the United States, the EU, and others, the most recent of which was announced by the United States on March 24, 2023. To date, 178 entities and individuals have been designated by the U.S. Department of the Treasury alongside more than 30 businesses targeted for export controls by the U.S. Department of Commerce and hundreds of individuals subject to visa bans by the U.S. Department of State.

Following Belarus’ support of Russia’s full-scale invasion of Ukraine in February 2022, many international firms and investors left the Belarusian market. A sharp decline in trade with the EU and Ukraine followed and resulted in a recession and a 4.7 percent drop in GDP over the course of the year. Most economists and international organizations predict a modest decline in the Belarusian economy through the end of 2023. In response to the exodus of foreign companies and capital, the Lukashenka regime passed a series of laws which provide for the seizure of private property and legalized violations of intellectual property rights held by citizens of “unfriendly states,” including the United States. In addition, Belarus is engaged in a “parallel import” scheme to evade sanctions by transferring controlled goods imported to Belarus to Russia without the knowledge or approval of the manufacturer.

Sanctions on the banking sector have inhibited Belarus’ ability to deal in hard currency, causing a technical default on external debts in 2022 and a corresponding drop in the country’s international credit rating. Much of the new investment in Belarus over the last year came from Russia, which pushed for the passage of a series of laws under the two countries’ “Union State” agreement to more closely align the Belarusian with the Russian economy. At the same time, private businesses, especially those registered in “unfriendly” countries, have come under increasing hostility from Belarusian authorities.  International and private domestic companies have observed the selective enforcement of regulatory and criminal laws for political purposes and the arbitrary detention of employees.

Belarus’ judicial system is not independent and is largely unable to adjudicate cases objectively.  Courts act under the influence and direction of the central government.  Corruption and the lack of judicial independence remain significant deterrents to attracting foreign capital.  Analysts report Lukashenka and his inner circle also control private businesses that receive preferential treatment from the government.  In 2019, the Council of Europe’s (COE) Group of States against Corruption (GRECO) declared Belarus non-compliant with GRECO’s anti-corruption standards.

​

Country Links

National Bank of the Republic of Belarus

The Department of Financial Monitoring of the State Control Committee of the Republic of Belarus (DFM)

Belarusian Chamber of Commerce and Industry