Banks, registrars and depositories to help check accounts of parliamentary candidates

In April the Bank of Russia will start testing electronic communication system between the Bank of Russia and market participants intended to verify information on property of candidates at the forthcoming election.

Coordination between the regulator and financial institutions is implied as part of enforcement efforts with respect to Federal Law No. 231-FZ that became effective in February 2016. Pursuant to this law, it will be binding on banks, registrars and depositories to report as requested by election commissions on financial assets held by candidates for deputy or any other elected office as well as by their spouses and minor children.  The new rule applies to all elected offices.

It is worth mentioning that under this communication scheme requests by all-level election commissions will be submitted on a centralised basis via the Central Election Commission (CEC) of Russia to the Bank of Russia. Then the regulator will forward the requests to the market participants, and, after the responses have been received, send them back to the CEC.  Such a solution will allow to considerably reduce the transaction burden for all communication participants. The 'default answer' principle used by the Bank of Russia for the communication system also meets the purpose. The market participants will be entitled not to reply the requests, if they do not hold information on assets of the candidate.

A total of about 800 financial institutions are subject to such reporting requirements under the law. The electronic communication among the Bank of Russia, CEC and market participants will be held via personal account system on the Bank of Russia website.

The regulator wants to make sure during the testing that credit institutions, registrars and depositories will cope with the task to verify information on the financial assets of candidates, their spouses and minor children. The testing will be divided into two stages: in April companies will be tested on a voluntary basis, in May the general testing will be held. On completion of each stage the Bank of Russia will discuss the verification results with the market participants to assure smooth operation under actual conditions.