Legal alerts / 21.09.2021

Bank accounts working with cryptocurrencies risk blocking

The Central Bank of Russia has issued recommendations for Russian banks to pay more attention to certain transactions made by individuals, including those with cryptocurrency marketplaces[1].

The formal reason for issuing these recommendations is to conduct internal control procedures pursuant to Federal Law No. 115-FZ “On anti-money laundering and terrorism financing”. Forex dealers, online casinos and lotteries, various types of “financial pyramids”, as well as cryptocurrency marketplaces are listed as controlled types of “suspicious” business.

The Russian Law on Digital Financial Assets requires that an marketplace office must be registered within the Russian Federation and hold the appropriate licence from the regulator. Therefore, unregistered marketplaces face a risk of individuals’ accounts being blocked.

Banks are advised to not only block all suspicious transactions with cards and wallets, but to also terminate the service agreement with the client if there are more than two blockings a year.

Accounts that meet two or more criteria will be considered suspicious:

  • unusually large number of individual (payer and/or recipient) counterparties, e.g., more than 10 daily and/or more than 50 monthly;
  • unusually large number of transactions with individual counterparties to credit and/or debit funds, e.g., more than 30 transactions daily;
  • large number of credit and/or debit transactions for non-cash funds between individuals, e.g., more than RUB 100,000 daily and/or RUB 1 million monthly; a short period of time (one minute or less) between crediting and debiting funds;
  • transactions to credit and/or debit funds are made within 12 hours (or more) in a single day;
  • during the week, the average balance of funds in the bank account at the end of a transaction day does not exceed 10 percent of the average daily volume of transactions on the bank account;
  • transactions differ from the individual’s usual activity (e.g., payment for utilities, communication services, other services, goods, works);
  • similar identification data about the device (e.g., MAC-address, digital fingerprint, etc.) used by different individual clients for remote access to transfer funds.

In this way, the Central Bank has taken a step toward making it harder to trade in cryptocurrencies in Russia, although the legislation does not explicitly prohibit individuals from exchanging and trading in cryptocurrencies.

The Central Bank of Russia recommends that financial service providers do the following to comply with internal control procedures:

  • implement measures to analyse the use of “online services” and regularly update and improve them;
  • use information exchange protocols with extra user authentication steps;
  • act to prevent the use of “online services” by robots filling out payment instructions, and instantly improve the measures taken;
  • provide the payer with additional confirmation of the beneficiary’s account number (identifier) when filling out payment instructions;
  • identify unlawful mentions on the Internet and/or use of “online services” and electronic means of payment, including indicating that they could be used to make settlements with bad-faith businesses.

[1] Guidelines on increasing the attention of credit institutions to certain transactions of individual clients No. 16-MP dated 6 September 2021

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