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March 18, 2022

The Russian Central Bank tightens its oversight of P2P transactions

According to local media, the Central Bank of Russia (CBR) has recommended that the country’s commercial banks increase their monitoring of users’ transactions that could be aimed at circumventing the CBR’s “special economic measures to counter the outflow of foreign currency abroad.” The recommendation includes tighter oversight of cryptocurrency trading, which is mentioned as one of the methods for withdrawing capital from Russia.

The letter, sent to banking organizations on Wednesday by CBR vice chairman Yuri Isaev, directs them to pay closer attention to instances of “unusual behavior” by their clients. This includes “abnormal” transactional activity and unusual spending patterns. Any money withdrawals made using digital currencies should also be scrutinized more closely, according to the letter.

Suspicious transactions must be blocked if necessary, and information about them must be passed to the Federal Financial Monitoring Service (Rosfinmonitoring).

During the early days of the Ukraine war and the resulting economic sanctions, special measures were put in place to limit the outflow of foreign currency. They include a $5,000 limit on foreign currency transactions for Russian citizens, as well as a $10,000 cash limit for those traveling abroad. Purchasing real estate, securities, and other assets from residents of “unfriendly” jurisdictions necessitates government approval.

The news comes as no surprise given that over 10 million Russian citizens collectively own approximately 5 trillion rubles ($63 billion) in cryptocurrency. With their Visa and Mastercard cards deactivated and their own government imposing strict transaction restrictions, many Russian citizens are left with cryptocurrency as their only option for transferring funds.

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Aleksey Voylukov, vice-chairman of the Russian Banks Association, told journalists that the CBR’s recommendations aim to prevent the spread of schemes to circumvent the imposed limits, particularly through crypto exchanges.

Despite widespread perceptions of Russian oligarchs attempting to conceal their wealth, it is ultimately ordinary people who rely on digital asset infrastructure in the face of skyrocketing inflation and tightening government monetary control.