The Central Bank of Russia Tightens Transaction Monitoring

The Central Bank of Russia has tightened its transaction monitoring – particularly for its P2P transactions including that of crypto. These are designed to potentially catch out the outflow of currency abroad. 

Crypto is one of the main vehicles used for withdrawing capital from Russia, so it is unsurprising that they have chosen to focus on this area within their monitoring and anti-money laundering operations. Any withdrawals of money using digital assets might be marked as being a more “unusual pattern” , and this, together with other transactional activity deemed as being “abnormal” will be monitored more closely.

Why has the need for this type of transaction monitoring arisen?

This type of transaction monitoring has arisen because of the changes that Russians have had to make to the way that they spend and use their assets. Due to the ongoing war, many major operators such as VISA have elected to place sanctions against Russia and have therefore chosen to remove themselves from the Russian markets.

This has left millions of Russians unable to use their credit cards and they have had to turn to other sources. While cash can still be used for in-person purchases, it is obviously not an option for any online transactions. It also makes P2P that bit more difficult to facilitate.

For this reason, the Central Bank of Russia has discovered that many more people are looking into using crypto for these online transactions. Though crypto transactions are inherently anonymous, there are some ways in which monitoring can be used to keep an eye on them. A governing body could choose to monitor the activity based around a certain wallet’s ID. This then means that regulators could move to block transactions from that particular wallet if they were concerned about the activity it displayed.

What has been done to limit these transactions?

Since suspicious transactions are already being monitored closely, there have already been some serious caps put in place to try to limit suspicious trading. Should someone find themselves as being designated as having suspicious transactions, they will be blocked from using that platform. Their information will also be passed along to the Federal Financial Monitoring Service (or the Rosfinmonitoring). 

There have also been caps in place to limit how much Russians are able to spend. At the moment, foreign currency transactions have been limited to $5000. This is raised to $10,000 for those who are travelling abroad.

Should a Russian wish to purchase property or some other similar asset from a resident of a country deemed to be “non-friendly”, the transaction will also need to be assessed and authorized by the Russian government before it can go ahead. 

Transaction monitoring is in place across many aspects of the Russian internet, meaning that it is incredibly difficult to spend money abroad at this point. Restrictions are very tight, which means that many blocks could be put in place even if the transaction at the heart of them is perfectly legitimate.

How will this affect the Russian people?

This style of transaction monitoring will definitely affect the everyday Russian more than some of the oligarchs one might imagine it to be focused to. With the loss of VISA, it is the everyday Russian citizens who have had to turn to payment methods such as crypto in order to be able to make their payments. 

It is thought that more than 10 million Russians currently hold crypto assets worth approximately 5 trillion rubles ($63 billion). Though many of these Russians will just be trying to make payments normally, transaction monitoring is required here to make sure that there are no suspicious payments gliding past with the group of more normal payments.

Inevitably, there will be some Russians who have their assets accidentally frozen as a result of this monitoring of transactions. This is why a robust and detailed system is always needed to ensure that ordinary people will be able to send their payments without issue, especially while sanctions against Russia are still in place. With many Russians still in contact with their family abroad and willing to send or receive money from them, monitoring transactions will be a key part of ensuring that money and assets are still able to flow, and families are still able to spend and support themselves.

Why transaction monitoring is so important

Any company that handles payments needs to ensure that they have some system for monitoring transactions in place to prevent fraudulent behaviours and financial crimes such as money laundering. With restrictions having tightened around Russia, it is unsurprising that the Central Russian Bank has also increased their controls.

Do you need help with transaction monitoring within your company? Get in touch with the team at 123 Signed today for advice and tools for compliance in this key area.