Law Enforcement Agencies Might be Allowed to Block Wire Transfers

Law Enforcement Agencies Might be Allowed to Block Wire Transfers

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The Federal Financial Monitoring Service of the Russian Federation (Rosfinmonitoring) has drafted a bill which provides for the blocking of transfers of Russians for 10 days without a court ruling. The decision to prohibit money transfers will be made by the Federal Security Service or the Internal Affairs Ministry.

According to Lenta.ru, this document says that funds transferred from the card or e-wallet will be blocked if the law enforcement agencies have enough data showing that the money is used to finance terrorist or extremist activities. In addition, law enforcement officials will be allowed to block cards and e-wallets of Russians in case of payment for narcotics.

The explanatory note attached to the bill says that such actions will be applied if it is necessary to act quickly as it takes a certain amount of time to obtain a court decision. This blocking will be in effect only for 10 days, so as not to violate the right of citizens to use “the funds belonging to them.” Further blocking is only possible by court decision.

The cards might be also blocked for 10 days without a court ruling on suspicion that the funds will be used to organize riots and unauthorized rallies. This bill is published on the portal of normative legal acts.

Blocking is possible if law enforcement officials have sufficient information that transfers will be made to fund public that might lead to “mayhems, riots, and arson” and destabilize the operation of vital facilities, social or transport infrastructure, according to the explanatory note.

It also says that the state authorities have the right to take such measures only in urgent cases. At the same time, it is necessary to “confirm and document in advance” that the funds are likely to be used for criminal purposes.

In addition, the explanatory note says that the decision to block certain transactions without a court decision can be made by a limited number of officials. The bill stipulates that if an account is blocked, a notice must be sent within 24 hours to the Prosecutor General, his deputies, or subordinates. At the same time, the Prosecutor General's Office has the right to appeal against such a decision if it was taken in violation of the law. Gazeta.ru reports that the bill also specifies a 48-hour deadline to review an objection.

The authors of the bill say that, as practice shows, every day in Russia law enforcement officers “will make about 17 such decisions, and about 120 per week.” These calculations are based on statistics recorded over the past two years. According to the authors, the adoption of this bill will provide an opportunity to act effectively and ensure both the security of the state as a whole and protect the interests of society and its citizens.

Such restrictions on money transfers “are aimed at preventing people involved in extremist organizations” from purchasing weapons.

According to experts, these rules “will be a headache for banks,” and “will not help” in the fight against criminals, Gazeta.ru. reported. Chairman of the National Council of Financial Market Andrey Emelin also thinks that such operations “will become a problem” for financial institutions, as they will require “manual administration,” Rossiyskaya Gazeta writes, besides, it will be necessary to inform the client about the decision which was taken by a state body.

Timur Aitov, Deputy Chairman of the Chamber of Commerce and Industry Commission on Digital Financial Technologies says that “criminals can make a duplicate submission to the dormant accounts in seconds, which will allow distributing millions of rubles quite quickly. It is not possible to return the money after that and, therefore, as Aitov says, “blocking of accounts won’t make sense.” According to him, this initiative does not expand in any way the powers of financial institutions to promptly “detect and respond to criminal transfers.” Experts also admit that accounts of honest citizens may be mistakenly blocked in isolated cases.

This bill is now undergoing public discussion and anti-corruption expertise.

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