Mechanism created to strike off data on bona fide bank customers from refusals database

Banks may now withdraw information on refusals submitted to Rosfinmonitoring with regard to individuals included in refusals list as a result of technical errors or on grounds other than the risk of legalisation (laundering) of criminally obtained incomes and the financing of terrorism. Said mechanism has been stipulated by the Methodological Recommendations of the Bank of Russia and Rosfinmonitoring, and also amendments to the formats of multilateral information exchange on bank services or bank account transactions being refused to customers.

These documents are designed to streamline banks’ use of their right to refuse, and mitigate the risk of restrictions on the provision of bank services to bona fide customers who may be included in the refusals database.

The Bank of Russia’s recommendations stress the need for credit institutions to employ a well-balanced approach when using the information about refusals and avoid making decisions on refusals on grounds not linked to the risk of legalisation (laundering) of criminally obtained incomes and the financing of terrorism.

Moreover, banks are advised to grant a structural unit or an employee the power to consider customer complaints about bank services being refused and make well-balanced decisions thereon.

The quality and effectiveness of banks implementing their right to refuse, and the outcomes of their processing of related complaints, are closely monitored by the Bank of Russia and taken into account when analysing banks’ performance. Based on the results of this analysis, the Bank of Russia assesses the correctness and timeliness of banks’ decisions and makes an overall conclusion about the efficiency of internal control procedures adopted by specific credit institutions to counter the legalisation (laundering) of criminally obtained incomes and the financing of terrorism.

At the same time, the lessons that credit institutions have learned so far in the process of using the information on refusals prove its importance and relevance in the implementation of a risk-based approach to serving customers, and have helped outline areas for further development.

The information exchange mechanism between credit institutions, the Bank of Russia and Rosfinmonitoring with regard to the implementation of banks’ rights stipulated by anti-laundering legislation, has been operational since June 2017.