June 1 saw the new provisions of the Civil Code of the Russian Federation coming into force. The new regulations provide for the extension of banks’ rights exercisable in respect of the funds of suspicious origin. In accordance with the new regulations, a bank has the right to freeze suspicious deposits or deny crediting them to a client’s account. Funds gained through selling cryptocurrencies fall within the “suspicious” ones as well, experts believe.
The amendments to the Civil Code expand the list of deniable bank transactions. The amended Article 848 of the Civil Code obliges banks to deny crediting funds to their clients if there are any suspicions about these funds being related to terrorist or extremist funding, arms and drugs trafficking.
The new regulations were announced by the Bank of Russia’s deputy director of the financial monitoring and currency control Ilya Yasinsky. He stressed that until now, banks had the right to deny outgoing transfers from their clients’ accounts, but could not block the incoming transactions even if the latter were causing suspicion.
Yasinsky also mentioned another new law (FZ 90), which will come into force on July 23, 2018. It will expand financial organizations’ authority in respect of their clients’ funds. The law was initially drafted in order to counter the proliferation of weapons of mass destruction.
Since this summer, the Federal Financial Monitoring Service will start maintaining a list of individuals involved in the proliferation of such weapons, whereas credit organizations will be obliged to check their clients’ databases systematically and report to financial intelligence on all suspicious clients. Blacklisted accounts will be then subject to permanent blocking.
Experts believe that in practice these new powers and the measures for their enforcement will more likely restrict ordinary clients’ transactions, rather than deter terrorists. As a result, many people involved in dealing with cryptocurrencies and electronic wallets may get their accounts blocked. Should a bank suspect its client of illegal commercial activity, the former will be authorized to block his or her bank card or even terminate the provision of services. Banks will also have the right to deny its client’s incoming transactions pending clarification of the transferred funds’ origins. If a client tried to credit funds gained from selling bitcoins at some foreign website, it may happen so, that his or her money will be frozen and for long.