Functional Breakdown of Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) Frameworks: Legalization of Income through Extrajudicial Collection and Risk Continuity Mechanism

Abstract

The paper analyzes the vulnerability of the national anti-money laundering system arising from the use of extrajudicial enforcement instruments (including notarial statements of execution, decisions of labor dispute commissions, and mediation agreements) and the transfer of assets through accounts administered by the Federal Bailiff Service. Drawing upon data from the Central Bank of Russia and Rosfinmonitoring for 2024–2025, the study identifies a functional gap between banking compliance mechanisms and public-law enforcement procedures, resulting in the effective neutralization of risk parameters in deposit accounts maintained by the Federal Bailiff Service. The paper substantiates the existence of a regulatory conflict within Article 3 of Federal Law No. 115-FZ, which excludes transfers carried out in execution of sanctions imposed by a state authority from the legal definition of «transactions involving monetary funds». The study proposes a legal mechanism ensuring continuity of financial monitoring, incorporating the principle of institutional inheritance of risk, a custodial quarantine regime for special deposit accounts of the Federal Bailiff Service, and procedural arbitration mechanisms for the release of frozen assets. The study demonstrates that implementation of this supervisory framework would preserve the flexibility of extrajudicial debt enforcement while simultaneously blocking channels for the laundering of illicit capital and transforming supervisory authorities into strategic coordinators of the anti-money laundering and counter-terrorist financing (AML/CFT) system.