Capital flight costs Russia $60 billion every five years

According to expert estimates, the losses incurred by Russia's federal budget from illegal capital outflow add up to 60 billion dollars every five years, said Sergei Stepashin, head of Russia's Audit Chamber, who spoke Thursday at the Moscow session of the working group of the International Organization of Supreme Audit Institutions.

Russia's chief auditor explained that illegal incomes are mainly laundered through the offshore zones. 'Dummy' firms based in various regions of the world are also actively used for this purpose.

According to Stepashin, the money laundered abroad is often channeled back into Russia as investments, foreign banks' and companies' loans, as false rent or fees for false services, and as part of payments for overpriced goods.

Recently, the country has intensified efforts to create a state system to counteract money laundering, the head of the Russian Audit Chamber emphasized. Early in 2002 a law came into force defining the procedure of control over dubious financial operations. Such crimes can be punished by up to 10-15 years of imprisonment.

However, Russian legislation in the sphere is still imperfect and needs further improvements, Stepashin believes. For example, in violation of the common international practice, Russian laws do not envisage responsibility for laundering illegal incomes to a total of less than $30,000. There is no criminal responsibility in the country in case the sources of illegal incomes were tax or customs duties non-payment.

"If such amendments to the legislation are made, many financial and industrial groups will feel utterly uncomfortable in this country," the head of the Audit Chamber believes.

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