Control of cash transactions by Federal Service of Financial Monitoring

LEGAL DIGEST, NEWS \ 15.08.2022

The President of the Russian Federation has signed a law establishing new rules for monitoring banking operations carried out by companies.

According to the law, transactions with cash or other property are subject to mandatory control if the amount is:

• at least 1 000 000 RUB in respect of monetary transactions (previously 600 000 RUB).
• at least 5 000 000 RUB in respect of cash transactions in real estate transactions (previously 3 000 000 RUB).

The first category includes cash transactions:

• withdrawal the cash from the account or crediting the cash to the account of a legal entity;
• purchase or sale of cash foreign currency by an individual;
• contribution of funds to the authorized capital by an individual;
• crediting or transferring funds to the account, including obtaining loans;
• opening deposits.

The second category includes any transactions with real estate, the value of which is not less than the amount indicated above. Crediting funds to accounts, contributing when making payments under a financial lease or leasing agreement, debiting funds from an account, buying up precious stones or metals, will be also controlled as non-cash cash transactions.

When determining a transaction subject to mandatory control, the banking sector establishes the type of transaction performed, the amount of its completion, the list of organizations that are associated with the transaction, as well as the period of time during which this information must be sent to the Federal Service of Financial Monitoring (Rosfinmonitoring).

Please note, that from July 1^st, 2022, the Central Bank of the Russian Federation has the opportunity to independently assess the integrity of companies and assign them a risk level of involvement in suspicious transactions. It is customary to consider suspicious transactions that companies have carried out in order to legalize income and (or) finance terrorism. The main criteria that will be guided by the bodies of the Central Bank of the Russian Federation in the assessment are:

• types of company’s activities;
• nature of banking operations;
• number of open bank accounts;
• relationship and interdependence with companies that conducted suspicious transactions;
• information about the founders and managers;
• Information received from federal executive authorities, such as the Ministry of Internal Affairs or the Federal Tax Service.

The collected data will be published on a special “Know Your Customer” platform, which can be used by all representatives of the banking sector. Also, the company’s dossier will indicate one of the risk levels:

1. Low risk. Banks do not have the right to refuse companies with such risk level to open accounts, as well as close existing ones. In addition, the bank will not be able to reject a payment if both the payer and the recipient in the group also have a low risk level. As a rule, such companies are engaged in real business activities, but if banks have any suspicion, then they can refuse to pay.
2. Medium risk. Companies with this risk level withdraw money from time to time for cashing out and operate in industries with increased risks. The bank will have the right to refuse to make a payment and to open an account. If there were more than two failures in a calendar year, then there may be a risk of termination of the banking service agreement.
3. High risk. Banks are required to block the account for companies with such risk level. It will be prohibited to make various payments, except for payments on taxes and salaries of employees, repayment of loans.

The money will be on a blocked account until the company proves its business transparency or is liquidated.

In addition, from October 1^st, 2022, the Central Bank of the Russian Federation will have the right to exclude companies with a red risk level from the Unified State Register of Legal Entities. But before that, companies will be given the right to challenge the decision to assign a high level of risk. If the interdepartmental commission of the Central Bank of the Russian Federation does not support the company, the dispute can be settled through the courts.

Information on the risk level will be publicly available to companies. They need to contact the servicing bank with the appropriate request.

In the matter of carrying out banking transactions, please contact Acsour specialists.