Bank of Russia recommends that banks block accounts of companies with signs of pyramid schemes and illegal activities
The regulator recommended that banks counteract illegal entities operating in the financial market and their intermediaries. In doing so, banks should resort to measures stipulated by anti-money laundering laws.
Banks can identify illegal entities among their clients using the List of Entities with Signs of Illegal Activities and Pyramid Schemes, and also information from the Know Your Customer platform. The Bank of Russia advises to conduct in-depth checks of clients on the List and, should their operations be recognised as suspicious, to refuse to carry out operations with them. After two refusals within one year, a bank may terminate a bank account agreement with a client. Moreover, if such a client is assigned a high-risk level in the Know Your Customer platform, the bank should also consider raising the client’s risk score. This will entail ‘blocking’ measures, i.e. clients will be unable to dispose of funds in their accounts and may be subsequently removed from the official registers of legal entities / individual entrepreneurs.
Banks may also apply a number of anti-money laundering measures (except for refusal and blocking measures) to counterparties of companies bearing signs of illegal activities and pyramid schemes.
The regulator recommends banks to constantly explain the risks associated with transferring funds to illegal entities to their customers.
Compliance with the recommendations will help limit illegal activities in the financial market and protect consumers.