Indian Journal of Science and Technology

Abstract

Background/Objectives: The article presents a descriptive analysis of the household sector response to external macroeconomic effects, which appear to change the nature of the interaction of households with financial institutions through credit facilities, savings, investment and insurance. Method/Statistical Analysis: To identify the groups of population that could potentially be involved in money laundering and terrorist financing due to insurmountable financial difficulties, we used methods of comparative analysis and methods of time series analysis. The analysis was performed according to a representative longitudinal survey of the population of the Russian Federation “Russian Monitoring of the Economic Situation and Public Health by NRU-HSE”, as well as on the basis of official data of the Central Bank of the Russian Federation for the period since 2005. Findings: The conducted analysis revealed changes in the structure of the welfare of Russian households that amid rising rates and loan growth at low financial literacy leads to the formation of population groups, whose trajectory of consumer behavior is completely determined by their credit borrowing and does not take into account the real material possibilities of the family. This group is quite plentiful and constant lack of money, often multiplied by the unreasonable demands, generates people with the potential risk of being involved in money laundering and terrorist financing. The most frequent consumers of loan products are families with children. However, the increase of households that applied for loans occurred among single people as well. It is among single respondents that during the study period the ratio of loans outstanding to the subsistence minimum doubled. In addition, the burden of payments for single people was also the most difficult: the ratio of loan repayments to the subsistence level for a single person is three times higher than for families with children and is twice higher than for families without children. These results complement the existing research, linking the financial behavior of households and their vulnerability to the risk of money laundering. Applications/Improvements: The obtained results may be useful in arranging the monitoring of financial safety at the micro level.

Keywords: Expenses, Incomes, Risks of Money Laundering and Terrorist Financing