Russian regulators are launching a “rehabilitation mechanism” for cryptocurrency traders mistakenly taken for ordinary criminals due to the nature of their transactions.
Authorities in Moscow have been trying to curb widespread fraud with new measures that have been affecting crypto users as well. The system admittedly needs fine-tuning.
Russia moves to unblock bank accounts used for crypto exchange
Working closely with the Ministry of Internal Affairs (MVD), the Central Bank of Russia (CBR) has started implementing procedures to unfreeze the assets of people dealing with cryptocurrencies.
Regular bank customers have been complaining that their accounts are being blocked based on suspicions of fraudulent operations, while in reality, the transfers are simply related to crypto transactions.
The monetary authority has introduced a mechanism to rehabilitate the law-abiding citizens, the head of its Information Security Department, Vadim Uvarov, announced at the “Antifraud Russia” conference.
During the event held this week, the official reminded that in accordance with current legislation, people who have been wrongly added to the bank’s special database for fraudsters can apply to be removed.
They can do that either by turning to their banking services providers or directly to the Bank of Russia, so that the legality of their blacklisting and its justification can be reconsidered, the business daily Vedomosti noted in a report.
The CBR executive revealed, however, that many of these applications are still rejected. On Friday, he was quoted by the Tass news agency as stating:
“I can immediately say that we do not satisfy most of the requests received by the Bank of Russia. The majority of people who end up in the database are there for good reason.”
Uvarov highlighted that most people who contact the regulator with these kinds of complaints are young, aged 15 to 24, as they account for the bulk of listed names and are often the target of police investigations.
Nevertheless, he was positive that the rehabilitation mechanism already works, urging affected citizens who believe they have been involved in suspicious activities without their consent to contact the MVD to settle the matter.
Bank of Russia plans to fine-tune the rehabilitation process
Vadim Uvarov also unveiled that the central bank intends to “sharpen” the rehabilitation mechanism and “clean up the database a little,” as the financial authority currently receives up to 1,000 complaints of this type daily.
A few weeks ago, in mid-November, CBR Governor Elvira Nabiullina herself admitted that the avalanche of such appeals indicated that there have been oversteps in the fight against fraudsters.
She acknowledged that the number of complaints about unjustified blocking of bank accounts increased despite a drop in the signals about fraud schemes received by the authorities, expressing hope that the issue will eventually be resolved.
Russia has been adopting a series of laws this year, allegedly designed to target financial flows resulting from fraud, scams and money laundering, including through crypto.
As part of these efforts, the Bank of Russia announced it’s planning to launch a so-called “Antidrop” platform. In Russian slang, the word “drop,” or “dropper,” is used to refer to someone exploited by criminals, sometimes without realizing it.
Funds stolen from defrauded victims are often converted to and from cryptocurrency, using bank cards and accounts registered under the names of these “money mules.” Russian banks are trying to quickly detect and freeze these kinds of transactions.
Multiple transfers, including between accounts owned by the same person, and usually of small amounts of money, often get flagged as suspicious by their automated systems and the respective accounts are blocked.
Critics have been warning about this, and other measures, such as capping cash withdrawals at ATMs, as not only hitting scammers, but ordinary crypto traders as well, especially those trading digital coins on a peer-to-peer basis.