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Blocking bank accounts in Russia

17.12.2015

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Russian banks initiated a campaign against dubious accounts. It is mainly related to legal entities (corporate bodies), but what about inspection of individual accounts and what to do if your bank account has been blocked? – today we are going to discuss these issues.
 
Banks’ campaign on verification of suspicious accounts has been activated in recent months, although the regulator sent a request to the Central Bank to tighten the control over illegal money laundering and further cashing out of funds in December of last year.
 
According to Igor Vengerov (VTB24) – Increase in control over bank accounts refers to the period from July till August 2015. Such a work, based on the letter from the Central Bank, is in hand and focused primarily on legal entities.

According to Dina Bagatova (BinBank) – Since summer 2015 all banking institutions has received a request from the Central Bank to provide reports on work aimed at disclosure and reduction of volume of illegal transactions and arrangements made for specific clients.

The Central Bank’s statement contains information related to the increase in control over specific financial operations of clients of all banks and banking institutions with no legitimate purpose and/or economic sense.
Needless to say that accounts with lack (or insufficient amount in comparison with total turnover) of tax transactions will be checked first. As dubious will be also considered accounts with deposits from a large number of companies or individuals, when funds are transferred to other clients the same day (typical transit money laundering). Accounts of organizations without obvious payments, for example, rental expenses or office expenses, labor costs and other regular expenses of an operating company will be inspected as well.


Accounts that fall under the criteria of dubious are subjected to in-depth inspection. In-depth inspection means verification of tax statement, supporting documentation, as well as various financial and accounting reports. After analysis of these documents a bank is justified to take legitimate decision on blocking an account and funds.
 
In the words of Dina Bagatova – Accounts are not blocked for no reason. Such measures are undertaken only as a last resort. Thus, banking institutions take care first of all about their own security because criminal responsibility for financial operations related to money laundering is applied not only to a client, but a bank as well. No one bank would like to be involved in dubious operations. At the moment only private entrepreneurs and legal entities are inspected.

So, what about individuals?

Any bank has a capability of inspecting an account of its client, as set out in legislation. Moreover, there are accounts that fall into a category of obligatory inspection.
We are speaking of accounts with transactions over six hundred thousand Russian roubles; accounts with contributions in favor of third parties; accounts with transactions to organizations related to or suspected in terrorism, and a wide range of legislated factors (115-ФЗ «Concerning the Counteraction of the Legitimization of the Proceeds»).
According to Michail Matovnikov (analysis department of Sberbank) – Individual accounts are blocked very rarely. Such cases can be called exotic, however, they happen to be. Clients who receive large amounts from companies (legal bodies) and cash out funds very quickly are under suspicion. It is unlikely that a fact of cashing out one million Russian roubles will arouse suspicions, but if we talk about tens or hundreds of millions, you are at risk; therefore, a bank might have some questions.
Banks attribute to the category of dubious also accounts used for transactions of large amounts of money, especially when funds are regularly transferred abroad. In such cases respective bodies are justified to request the confirmation of legitimate origin of transferred funds. Even if your account has been blocked, there is no reason to panic or get depressed. If you are able to provide documentation proving legitimate origin of your transactions, your account and all funds will be unblocked. In a case when legitimate origin of transfers or funds has been confirmed but account has not been unblocked, you have to appeal to the Central Bank and lodge a legal application.