Galina Bobrysheva, Rosfinmonitoring: requests from foreign banks decrease

Banks brought to the “traffic light” of the Central Bank

Regional banks continue to gradually connect to the new anti-money laundering platform “Know Your Customer” (KYC), which is aimed at preventing the legalisation of illegal financial transactions in the country. Representatives of the Central Bank, Rosfinmonitoring and credit institutions summed up the first interim results of the work of the “scary” service of the Central Bank at the conference “Current issues of compliance by credit institutions with the requirements of Russian AML/CFT legislation” on 17 November.

Why do bankers call it scary? It's simple: if the “entry” turns red when passing through the Central Bank platform and the bank agrees with the risk assessment, then it is automatically blocked. It will be allowed if the “green” lights up above it and will be forced to wait on the “yellow”. Thus, the KYC platform indicates the level of risk of bank customers from the point of view of anti-money laundering legislation (Federal Law No. 115): green is a low level of risk, yellow is medium, red is high. The risk criteria were determined by the Central Bank together with Rosfinmonitoring. The initiator of the control service development is the Central Bank.

Such a control “traffic light” has been fully operational since July 1, 40 commercial banks are connected to it in pilot mode. The Central Bank hopes that this year the vast majority of credit institutions will join the service, as the requirements for compliance with currency control and anti-money laundering legislation are being tightened. Although these functions are not related to each other, nevertheless, the tools for monitoring them have developed in parallel, they are converted among themselves. This is due to that the economy has received huge budget funds that need to be controlled, the participants of the meeting said.

Get to know your client through the Central Bank

The Central Bank expects that the “Know Your Customer” platform will provide a breakthrough in countering gray schemes.

“We have pinned great hopes on it in terms of an explosive increase in the effectiveness of the national system for countering the legalisation of criminal proceeds," said Ilya Yasinsky, the director of the Department of Financial Monitoring and Currency Control of the Central Bank, speaking at a conference of the Association of Russian Banks.

When the system was launched, two global targets were set, he says.

“Firstly, to make life as difficult as possible for those who do not conduct real economic activity but are specially created to participate in various scheme operations — illegal withdrawal, illegal cashing," he pointed out.

Secondly, to facilitate the work of banks in assessing the risks of customers and customers themselves. After all, banks often prefer to be safe and switch to a rigid manner of communication with the client, demanding more and more documents, Ilya Yasinsky acknowledged the inferiority of such behaviour. According to him, this behaviour is due to the fear of “incurring the wrath of the Central Bank and Rosfinmonitoring," although “it is possible to work in standard mode.” In this case, small business customers themselves are scared, who “do not understand what banks want from them”.

“They (customers) should digress from business to explain to the bank why they have the right to earn this money, and the money itself is of legal origin," Ilya Yasinsky reasoned. This is an additional burden on both the bank and the client, he agreed.

The “Know Your Customer” platform is expected to save small businesses from such negative aspects. At its launch, the Central Bank calculated that 99% of all legal entities and sole proprietors that are serviced by Russian banks will become “green” clients. At the same time, 0,7% of customers will remain in the “red” zone and 0,3% — in the “yellow” zone (these are those who are engaged in real economic activity, but are not averse to “earn extra money” on system operations).

The forecasts turned out to be generally accurate. According to Ilya Yasinsky, the number of “red” customers turned out to be 2 times less than expected — 0,5%. About 1% of the total number of bank customers turned out to be in the “yellow” zone.

“Red” will be blocked, but the money will be returned to them

Further, the director of the Department of Financial Monitoring and Currency Control of the Central Bank told how the process of passing through the “Know Your Customer” platform was “softened”.

“Initially, we wanted to go the hard way: if the platform “paints” someone red, then everything is blocked immediately, the money is not given, but confiscation goes to the budget. But in this form, the project caused rejection from everyone and was withdrawn from the State Duma. In the end, they refused to confiscate and allowed to undergo a rehabilitation procedure," he said.

Now it is not enough that only the system “paints” red, it is necessary that the bank also makes a decision. According to Yasinsky, the blocking of the client's funds will occur if the system “paints” him in red, and the bank agreed with the assessment of the platform.

However, the Central Bank does not doubt the accuracy of the client's risk assessment by the platform.

“As of today, we have received only 24 requests to review the risk level of a 'red' client," the speaker pointed out.

Statistics on rehabilitation are also small, Yasinsky said: “Very few clients have applied for a revision of the risk level.” For 9 months of 2022, this mechanism allowed to prevent about 140 billion rubles, and this amount is by 20% higher than last year. This suggests that the system works efficiently and it adapts to the changing risk landscape.

An example of the effectiveness of anti-washing measures was the identification of a scheme to withdraw 2 billion rubles.

“One of the latest, fresh examples of the effective use of additionally marked information is the suppression of activities of microfinance organisations to cover up settlements with online casinos, which, as you know, are prohibited as participants in the gambling business in the Russian Federation," said Deputy Director of Rosfinmonitoring Galina Bobrysheva. According to her, the regulator “promptly stopped the access of about 30 MFIs to the financial market”

Switzerland is not friends with Rosfinmonitoring

While the Central Bank strives for full transparency of the Russian financial market, global financial centres are moving away from this policy. Realnoe Vremya asked whether compliance requirements on the justification of capital origin have become tougher. It turned out that Swiss and British banks, considered an oasis of large capitals, have begun to interact less frequently with Rosfinmonitoring in the fight against illegal financial transactions.

“We do not directly receive information from credit institutions regarding the nature of relations with foreign banks, this is not quite part of our contour," explained the representative of Rosfinmonitoring. “But according to communication with members of the compliance council, it follows that against the background of a strict regime, the number of requests within the framework of correspondent relations is decreasing. Foreign correspondent banks request data on specific customers, their specific transactions not very often.

According to him, the service's focus is still on foreign correspondent banks that have been involved in high-profile events related to their use as “laundering” sites. “We ask our colleagues that if such correspondent relations are preserved, pay attention to them," he said.

“The pressure from the point of view of correspondent banks' requests has decreased significantly under the regime. This is synchronised with the changes — there are fewer calculations, less flow and the subject of interest," explained Galina Bobrysheva, the deputy head of Rosfinmonitoring.

There is a certain demonstration of distrust on their part, according to the head of the ARB, Garegin Tosunyan.

“They demonstrate to us that even at this moment they do not want to interact, there is an outrage in this," he noted reproachfully.