The Central Bank of Russia (CBR) has instructed commercial banks to pay increased attention to the all transactions of their clients that pertain to cryptocurrencies. Restrictions have been imposed on currency operations amidst sanctions being imposed by Western countries, which has prompted the regulator to ask financial institutions to keep an eye on crypto transactions. A letter was sent to the institutions by the financial regulator for identifying any anomalies that may be found in their clients’ transactional activity, such as changes in investment and consumer spending. The document stated that banks should keep their eyes open for any transactions associated with digital currencies, withdrawals made to other jurisdictions and any unusual increase in transaction volume.
They have also been told to monitor operations by individuals as well as entities that may be in violation of foreign currency restrictions and asset withdrawal by organizations that are based in ‘unfriendly’ countries. The CBR stated in the notice that in such situations, banks should do a thorough check of the client and should also consider classifying the transaction as suspicious and refusing it completely. The notice sent by the central bank had been coordinated with the Russian Federation’s main financial watchdog, Rosfinmonitoring. The Bank of Russia has been strongly opposed to the ongoing efforts of the government for legalizing the crypto space in the country.
It has cited risks for the financial stability of Russia and its citizens. The monetary authority had proposed a ban on a variety of activities associated with cryptocurrencies, such as mining, issuing and trading, back in January. Previously, the regulator had also advised banks to block wallets and cards that are used for conducting transactions with crypto exchanges. However, most of the other Russian regulators and institutions, including the Ministry of Finance, have been in favor of regulating crypto in the country.
Their stance is to maintain strict oversight of the market, but legalize it. The Ministry of Finance took matters forward in February when it submitted a draft law by the name of ‘On Digital Currency’. Its purpose is to allow authorized Russian banks for legalizing crypto operations and to fill the other regulatory gaps that exist in the framework after the law ‘On Digital Financial Assets’ had been implemented last year. The latest move of the Central Bank of Russia for curbing crypto transactions comes at a very uncertain time for the country.
As a matter of fact, with Western nations imposing sanctions, it has been widely speculated that the country will take an interest in digital currencies in order to get around them. Its military invasion of Ukraine has resulted in the sanctions and digital currencies could come in handy for restoring the country’s access to global finances. But, this speculation prompted western countries to take steps for preventing Moscow from using crypto assets for evading the restrictions that have been imposed. Nonetheless, it does not appear that the Russian central bank has changed its stance where cryptocurrencies are concerned and still remains against their legalization in the country.
