By BBC News Online's Jorn Madslien

The lumbering Russian bear is about to prove it can be nimble on its feet when it has to be.

The issue is financial crime, and it is the Group of Seven (G7), the world's richest nations, who want Russia to dance to its tune.

Financial crime is likely to be discussed at this week's Genoa summit.

The stakes are high, with Russia's potential entry into the World Trade Organisation possibly at risk should it not put its house in order.

The G7 ministers have long charged that Russia has been dragging its feet in clamping down on money laundering and tax evasion, thereby accommodating financial crime.

The question has grown in prominence in recent years as G7 governments worry about shrinking tax bases and the loss of offshore financial business.

And although the G7 has no permanent staff, no headquarters, no set of rules governing its operations and no formal or legal powers, Russia is expected to pay close attention to its demands.

Influential countries

A key reason for this is that Russia's entry into the World Trade Organisation depends on approval by the G7 member countries.

The G7 has assumed an informal agenda-setting role for global governance and will often debate international economics issues before organisations like the WTO take decisions.

The same goes for the Group of Eight nations, which is made up of the G7-countries plus Russia.

The heads of state are likely to endorse a new round of WTO trade negotiations when they meet in Genoa on 20-22 July.

For Russia, this is key.

Russia and the WTO

Russia is keen to join the WTO by the end of this year, or at least complete accession negotiations.

But before that it must meet demands that it adjust foreign trade legislation to WTO standards.

This would involve cutting state subsidies in farming and removing imports tariffs.

And it would require Russia to get a grip on tax evasion and money laundering.

Russia insists it should be allowed a transition period to bring its laws up to world standards and that a delay in doing so should not prevent it from joining the WTO right away.

Money laundering

Russia's inclusion in a money laundering blacklist, published last month by the influential Financial Action Task Force (FATF), a Paris-based agency supported by 29 governments, has made such calls for leniency less heartrending for the G7 finance ministers.

The blacklist encourages FATF supporters, which include most members of the Organisation for Economic Co-operation and Development (OECD), to threaten sanctions against defaulters in the fight against money laundering.

The threat has pushed territories such as the Cayman Islands, long accused by Western governments of being a core conduit for financial crime, to take action along FATF-approved lines.

Russia is following suit, launching a clampdown on illegal international transfers of dirty money from drugs, crime and corruption by pushing new legislation through quickly.

In May, the Duma ratified the broad international convention on money laundering, and the bill was soon signed into law by president Vladimir Putin.

Then, on 4 July, a more specific anti-money laundering bill was approved by the Russian parliament.

However, the Duma has yet to schedule a third and final reading of the bill, prompting the G7 meeting to urge Russia to pass the proposed legislation as a first and essential move to get itself removed from the money laundering blacklist.

Key move

The FATF's customary line is that while appropriate legislation is a prerequisite for removal from the list, evidence that new laws are actually being enforced is also required.

And renewed keenness at the IMF and World Bank for anti-money laundering activities, with both institutions recognising recommendations made by the FATF on the appropriate international standard for combating money laundering, means more pressure on Russia.

Russia's dependence on external financing and project assistance from the Fund and the Bank also explains the confused distinction between the G7 and the G8.

Finance gathering

Russia has been a member of the G8 since 1994, yet the country was merely a guest when finance ministers met in Rome last weekend to hammer out the economic agenda ahead of the Genoa summit.

"We will implement coordinated countermeasures against [Russia] later this autumn if they have not enacted significant reforms by then, as recommended by FATF," the G7 said in a statement.

Still, US treasury secretary Paul O'Neill appears confident that Russia's response will be immediate. "Money laundering in Russia is a closed issue, the question has been removed from the agenda," he said.

Tax havens

To build a robust system to fight financial crime, Russia must also come down hard on tax evasion, the G7 insisted, adding that it is concerned about its recent decision to reduce its taxes on company profits.

"We still have problems there," Mr O'Neill said.

The G8 summit in Genoa will discuss how to reduce the effects of so-called "harmful tax practices" in so-called tax havens.

However, meddling with other countries' tax systems is highly controversial.

Last year, the OECD launched a list of 35 territories suspected of harbouring tax evasion, which its members threatened with sanctions should they not introduce OECD-proposed countermeasures by 2005.

Recriminations

The list sparked an international row with many of the countries listed, most of them small Caribbean and Pacific states, accusing the OECD of trying to cut out the competition in offshore finance.

After months of recriminations between the OECD and the states on the list, O'Neill withdrew US support from the more contentious parts of the OECD's plans, those which seemed to allow external control on tax rates, and the G7 hopes to encourage a final compromise.

"We also note that the OECD envisages to extend to 30 November 2001 the time for making commitments. We encourage remaining jurisdictions to commit by that date to transparency and effective information exchange," the G7 said in a statement.