The Central Bank of Russia has published amendments to Regulation No. 375-P which define the indications of suspicious transactions. By these criteria, banks can block the clients’ accounts. The list of the latter has not changed since 2012 and contains more than 100 items.
The Central Bank collaborated on the amendments with the Federal Financial Monitoring Service of the Russian Federation (known as Rosfinmonitoring). The main purpose of the initiative is to exclude outdated and assimilate up-to-date patterns for identifying irregular transactions "with the help of the evolution of the financial market and the general digitalization of technologies.” The document is currently being assessed for possible regulatory risks.
According to the new amendments, the Central Bank proposes to exclude transactions with high commissions and a number of transactions with complex calculations under non-standard schemes from the list of suspicious transactions. As follows from the document, if in case of any questions from the bank, the client refuses to complete a single transaction or demands to close the account and pay out the money to him or her, it will also be a sign of his/her dubiousness.
Another proposal is to add the regular cashing operations by individuals to the list of suspicious operations, in cases where the funds come from a legal entity or a self-employed entrepreneur.
Corporate entities should also get closer attention if there if their revenues exceed expenditure significantly. Therefore, the list of grounds for blocking accounts may include issues related to the companies dealing with digital assets or using cash in payments.
Remote transactions carried out on a single device such as a computer, smartphone or tablet, may also be subject to blocking. Financial transactions made on accounts of different legal entities and individuals within the same sub-network may also be considered dubious.
The Central Bank underlined the absence of “limitations” on the revised list, which means the lending organizations have the right to augment it at their own discretion.
Experts point out that banks have already included many earmarks of dubious transactions in their own internal rules, and that is why no significant practical changes can be expected after their introduction at the global level. In terms of the classification of transactions with digital and virtual assets, the qualifications and expertise of bank employees will play the key role.
At present, it will be easier for businesses to understand which transactions are of high risk. Along with it, the attribute that, according to executive documents, makes it possible to refer an operation to the “dubious” category, is of the utmost concern to experts -- it is not obvious how the banks will classify the documents of this kind, as this idea contradicts current regulatory norms for execution of court rulings.
As experts note, the Central Bank’s change of the reasons for blocking the accounts is fully justified owing to new technologies and financial schemes. As a matter of principle, it keeps the approach to the "presumption of guilt" but is developing more flexible and versatile. It means that the number of cases where the accounts of bona fide customers get frozen should significantly reduce.
According to the 2019 statistics, 52% of small and medium businesses that faced the blocking funds by banks had to completely stop all transactions. Drastic "anti-blocking" requirements are pushing businesses to switch to payments in cash.
A total of 20% of respondents said that in 2018, their accounts were blocked at least once. According to a survey, 43% of participants from this group admitted that the consequences of the "freezing" of accounts caused grave problems with their business. For comparison, in 2017, 28% of companies that were subjected to this measure stated the significant consequences of blocking accounts and transactions.
The so-called "anti-money laundering" law was adopted back in 2001 but it did not work as it should have done until eleven years later. The original purpose of the law was to block the accounts of companies suspected of the financing of terrorism. However, when the regulator began to impose severe sanctions for non-compliance, banks started to excessively block any transactions that looked "non-standard" to them.