Rosfinmonitoring Extends the List of Financial Transactions Subject to Mandatory Control

16 may 2018 2018-05-16

Banks will have to inform on cash withdrawals using foreign cards if the country of issue is in the "area of interest". The list of such countries shall be determined by Rosfinmonitoring. Such provisions are stipulated by the draft amendments (available to Izvestia), which were approved by the Government Law-Making Commission on Monday. The document has already been agreed with military and security forces and the Central Bank of Russia. Experts note that provisions, which became effective abroad long ago, appear in the Russian legislation.

The draft prepared by Rosfinmonitoring makes amendments to the Law "On Combating Legalization (Laundering) of Proceeds from Crime and Financing of Terrorism". The amendments extend the list of transactions subject to mandatory control. Currently, the banks shall inform the service, for example, on transactions for more than 600 thousand roubles and transactions with real estate at the cost of more than 3 million roubles. Now the transactions with respect to withdrawal of cash using cards issued by foreign banks abroad will be under control. This is not about all foreign cards but only those issued in the countries that will be on the list of Rosfinmonitoring. The access to this list will be restricted for average bank customers.

Banks, at automatic teller machines or branches of which withdrawal of money from a foreign card will be made, will have to notify on it Rosfinmonitoring within three days. In particular, specify the amount, date and place of a transaction, a payment card number, information on a cardholder received from a foreign bank, as well as a name of a foreign credit institution.

According to the supporting materials to the document, innovations will allow to promptly include foreign countries in the "area of interest" or remove them from increased monitoring. Thanks to this, it will be possible to identify financing mechanisms of terrorists and extremists, as well as to solve other issues for providing security in Russia. According to the experts familiar with the document, primarily the countries, where terrorist organizations are most active, will be on the list of Rosfinmonitoring. For example, Iraq or Afghanistan.

It is noted in the materials that the draft amendments are agreed with the Ministry of Justice, Ministry of Finance, Ministry of Communication and Mass Media, General Prosecutor's Office, Federal Security Service, Federal Customs Service, Central Bank of Russia. The law shall come into effect in half a year after adoption.

The proposed forms of control affect the constitutional rights of citizens, including the right to information and the right to private property, the Institute of Legislation and Comparative Law under the Government of the Russian Federation noted. The idea to make the list of issuing countries secret requires additional grounding, it is stated in the Institute opinion.

The drafters are also sure that innovations will not violate the rights of citizens in any way. According to authors, sending data on withdrawal cash using foreign cards to Rosfinmonitoring does not restrict the right for such transactions or obtaining statements.

The bill does not introduce prohibitions and, therefore, it does not prejudice civil rights, the Chairman of the Management Board of the Association of Russian Lawyers Vladimir Gruzdev agrees with the authors of the initiative. He emphasized that keen interest with respect to one or another country did not arise for no reason.

"The fact itself that some person uses a card issued in such "dark zone" may already cause suspicions. Such cards may be used for financing terroristic groups, including small units and autonomously working performers. It stands to reason, there is no point for a terroristic group to open an account in a Russian bank and use its card. But a card issued in a foreign country allows to avoid some problems, for example, allows to hide a source of financing," Vladimir Gruzdev explained.

Project Manager of S&K Vertikal Law Firm Yulia Andreeva also agrees with him, according to her, the citizen's rights are not limited by innovations, since amendments are made to the federal law, which is freely available and subject to mandatory publication. She draws the attention to the fact that the bill relates not only to revealing of financing terrorism and extremism but to completing tasks aimed at provision of security of the RF on the whole as well.

The bill legalizes in Russia the provisions, which became effective abroad long ago, Head of the National Anti-Corruption Committee Kirill Kabanov says.

According to him, the list of countries to be controlled will be composed based on the latest information regarding the countries through which banks the funds for financing terrorism flow. Illegal activities, including terrorism are paid for not via accounts but in cash, Kirill Kabanov noted. Tracking financial flows is a standard practice in combating not only terrorism, but also other crimes, for example, tax evasion or laundering of illegal income, he believes.

Amendments to the law shall be considered as additional measures for combating exactly in the sphere of struggle against terrorism, Member of the Pubic Chamber of the RF Mikhail Anichkin is sure.

"In any case, law-abiding taxpayers should not be afraid of measures aimed at combating criminal activities. Their rights may be restricted only in the event of conducting illegal financial transactions," he believes.

Mikhail Anichkin noted that Rosfinmonitoring strictly regulates its access to personal data based on law. All data are highly classified. Therefore, the leakage of personal information is almost impossible, except for commercial banks, where some mala fide employees can disclose it, he believes.

Rosfinmonitoring failed to provide a prompt comment.

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