September 18, 2020

In the Russian Federation banned the entry of cash to anonymous wallets

From August 3 in Russia it will be impossible to anonymously replenish accounts in cash in the payment systems "Yandex.Money", QIWI and others. Right now, this is unlikely to have a strong impact on cryptocurrency holders, but it could have serious consequences in the future.

New rules come into effect in Russia on 3 Augustregarding depositing cash to electronic wallets such as Yandex.Money, QIWI, WebMoney and PayPal. Their clients will not be able to replenish their accounts anonymously, for example, through payment terminals and the offices of cellular operators. The amendments were made to the law "On the national payment system", the goal is to combat illegal activities such as the financing of terrorism and drug trafficking.

The amendments that have entered into force will not affectusers of crypto exchanges, said Dmitry Kirillov, senior lawyer of tax practice at Bryan Cave Leighton Paisner (Russia) LLP, teacher at Moscow Digital School. The law deals with electronic money operators. Their activities are regulated by legislation and acts of the Bank of Russia. International trading platforms dealing with digital assets are outside the scope of such regulation and are not subject to new restrictions. But this may affect those who buy cryptocurrency, for example, through exchangers using ATMs.

"Channels for crediting funds to accounts in suchsystems remain traditional, including cash deposits through ATMs or terminals of electronic payment systems. Russian banks and payment system operators will be obliged to comply with the new requirements and stop crediting cash from anonymous users through such channels, ”Kirillov warned.

Member of the Commission on Legal Support of DigitalEconomics of the Moscow branch of the Russian Bar Association, head of the Russian Center for Competence and Analysis of OECD Standards, RANEPA under the President of the Russian Federation, Antonina Levashenko, explained that restrictions on depositing cash to anonymous e-wallets are related to strengthening standards in the field of combating dirty money laundering. In particular, the FATF monitoring for Russia in 2019 noted vulnerabilities in the use of electronic money due to the risks of anonymity. Therefore, Russian regulators are trying to eliminate the relevant FATF comments and increase the transparency of the use of electronic systems. Currently, these measures do not affect cryptocurrency, but in the future this is likely to change.

“Will it affect cryptocurrencies? Currently, these changes have been implemented only in relation to electronic money in accordance with the amendments to the law on the national payment system. But in the near future, undoubtedly, yes. FATF standards are always applied to new technologies by analogy: if at first the standards were spelled out for classic bank accounts, then they were first extended to electronic wallets and prepaid cards, and then to virtual wallets for cryptocurrencies, ”Levashenko suggested.

EXMO Exchange Development Director Maria Stankevichbelieves that the adopted amendments to the law play into the hands of exchanges for trading cryptocurrency. Users can fund their accounts on trading platforms through electronic systems that have anonymous ways of depositing funds, including through ATMs. This has been an issue for exchanges to comply with anti-money laundering requirements.

"A small insider: one large payment system ... at one time refused us after a long passage of all compliance procedures. Colleagues explained this by the fact that despite the strong anti-money laundering and anti-fraud procedures, our exchange has the ability to replenish an account through the named payment systems, which, in turn, can be replenished with cash. This means that no one can trace the origin of these funds, which contradicts all the policies of this payment giant. We were very upset then, but hoped that someday such a law would be adopted, ”Stankevich said.

She added that the anonymity of cryptocurrenciesends where they start interacting with fiat currencies. Therefore, those exchanges that have not yet introduced mandatory user verification and at the same time work with fiat channels are walking on "very thin ice". Storing funds and trading on such sites is unsafe, Stankevich warned. From her point of view, the new rules will not affect the demand for cryptocurrency in any way, but the trading volumes of the companies that still work with “dirty” funds and not verified users will drop.

Head of Binance Russia and CISGleb Kostarev is confident that these changes will have almost no effect on the cryptocurrency industry. On Binance and many other exchanges, you can buy digital money for rubles only after passing KYC and verifying your identity.

The experts agreed that the effectivethe amendments will have almost no impact on the digital money industry. Unless this may affect users who buy cryptocurrency through exchangers, depositing funds through ATMs and other anonymous methods. But in the future the legislation may be expanded to combat money laundering and terrorist financing.

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