Russia's plan to combat money laundering

President Putin is the latest Russian leader to come under pressure to reform

The Russian government has announced it plans to set up a financial watchdog as part of a broader effort to cut out financial crime.

The new financial monitoring commission will open for business on 1 February, with Viktor Zubkov, currently chief tax inspector for the St.Petersburg region, in charge.

The commission will be under government control, sparking criticism from those that believe that for it to be truly effective, it would need to be independent.

Russia has faced pressure from the international community to act, particularly in the face of the effort to track terrorist funds, following the 11 September attacks.

It will have the teeth Mr Putin gives it to get some money back from the people who aren't his friends

Money laundering expert Jeffrey Robinson

The Financial Action Task Force (FATF) has put Russia on its blacklist of countries unwilling to cooperate in cutting out financial crime.

The new agency will have responsibility for enforcing a new law on money laundering, which calls for supervision of any banking transaction which exceed 600,000 roubles, ($20,600).

Some estimates are that there were an estimated $100bn of 'dirty money' or illegal financial activities in Russia last year.

"They lose anything up to $20bn to $25bn a year. There are some who think there is something like $200bn of Russian money abroad, which is invested abroad, not all in bank accounts," Professor Martin McCauley, Russian expert at the University of London told the BBC's World Business Report.

"The evidence is that less money is being invested abroad and more money is being invested in the Russian economy, which is a very good sign," he said.

He welcomes the move to set up a commission, which he says should control the 'illegal transfer of money out of Russia'.

Doubts

However, scepticism remains about whether the agency will meet its aims.

"The agency being set up will certainly have nice offices, I am sure they have a computer or two and that is about all it will do. It is windowdressing," money laundering expert Jeffrey Robinson told the BBC's World Business Report.

"It will have the teeth that Mr Putin gives it to get some money back from the people who aren't his friends...It will do absolutely nothing on an international basis," he said.