Transforming the Regulation of Russian Financial Institutions: A Response to Modern Challenges of Money Laundering and Terrorist Financing

Abstract

The paper reveals the approach to the regulation of Russian financial institutions, which is aimed at identifying their vulnerabilities to risks and building risk profiles for a set of interrelated risks. In the framework of this approach, the authors outline the concept of the relationship between the vulnerabilities of financial institutions and households to the risks of money laundering and terrorist financing, as well as a methodology for identifying the vulnerabilities of systemically important banks to these risks. As a result of the application of this methodology, three types of risk profiles of Russian banks were identified, their visualization was presented, and the corresponding vulnerability zones were specified. The authors formulated proposals for the mega-regulator of the Russian financial market and for systemically important Russian banks based on the regulation of financial institutions aimed at reducing their vulnerability to risks