Ukraine is calling for the Financial Action Task Force to impose more limitations by putting Moscow to its “black list” or “grey list” after the group barred Russia from membership in February. The FATF is an intergovernmental organisation that establishes rules for countering “dirty money.”

To avoid financial isolation on the world stage, Russia presses India for assistance.

According to reports, a Russian agency warned India of unpredictably bad outcomes in the event of FATF sanctions.

Behind the scenes, the Kremlin is exerting pressure on states, including India, threatening to upend energy and defense agreements unless they assist in thwarting plans to turn Russia into a financial pariah state due to its invasion of Ukraine.

A unique perspective is provided by documents reviewed by Bloomberg and reports from NATO officials who are acquainted with the issue.

That presents a challenge as the most populous country in the world seeks to strengthen its public finances and manage the fallout from the globe’s tightening financial conditions and banking crisis. According to Bloomberg calculations, the market value of the seven publicly traded firms targeted for privatization is around $25 billion.

Apart from the sale of IDBI Bank, which is already underway, work has stalled for other firms, according to a source familiar with the privatization drive who asked to remain anonymous because the negotiations are private. In particular for businesses dealing with legal or labor concerns, the source warned that the national elections in India the following year might further halt sales. The likelihood that the administration would give privatization top priority during the election season is increasingly doubtful, according to market observers.

The FATF’s blacklisting of Putin’s regime would place it with the only other nations with that status, North Korea, Iran, and Myanmar, and further isolate his economy due to the conflict. If the proposal becomes law, member nations, banks, investment firms, and payment processors would be required to exercise increased due diligence and, in the worst situations, take countermeasures to safeguard the global financial system.

India is one of several nations in the so-called Global South that have mostly maintained their neutrality in the face of Russian aggression against Ukraine. This past weekend, during a Group of Seven conference in Japan, Indian Prime Minister Narendra Modi and Ukrainian President Volodymyr Zelenskiy had their first-ever face-to-face meeting.

Russia warned that the following projects with India will be at jeopardy if more sanctions are adopted:

  • Rosneft, a major oil company, and Nayara Energy Limited are collaborating
  • India’s imports of Russian weaponry and military hardware as well as technological collaboration in the defence industry
  • Technology and energy collaboration at India’s Kudankulam nuclear power plant Russian suggestions for new collaborative aviation projects were presented during the Aero India 2023 expo in February
  • An agreement on cargo transportation services related to the creation of a North-South commerce corridor between the Container Corporation of India and Russian Railways’ RZD Logistics

The meeting was probably uncomfortable for Russian President Vladimir Putin to watch, as his own travels have been restricted since the invasion and an arrest warrant for alleged war crimes was issued in March by the International Criminal Court. However, there is no indication that India’s position will change any time soon.

A senior UK official said that Zelenskiy’s weekend at the G-7 meeting with some of the leaders Putin has aimed to win over as friends for Russia was far more significant than any conflicts that may have arisen there.

If the FATF approves further sanctions against Russia, a Russian state agency earlier this month warned its Indian counterparts of a cascade of unanticipated and detrimental effects for cooperation in defence, energy, and transportation, citing.

At the conference in May, the agency encouraged India to “vocally” reject any attempts by Ukraine to add Russia to the “black list” of high-risk nations, warning that even inclusion on the more moderate “grey list” would present problems.

Whether India heeded the warnings is unknown to Bloomberg. Requests for reaction from the governments of Russia and India went unanswered.

The FATF’s unprecedented suspension of Russia was described as politicised and illegitimate by the Russian agency in one document, which omitted any mention of the fact that it was a reaction to Putin’s invasion of Ukraine.