The Central Bank of Russia is leading a major effort to prevent the unauthorized over-the-counter trading of cryptocurrencies and other unlawful financial transactions. Together with Rosfinmonitoring, the central bank is developing a monitoring system that will become the core of combating shadow transactions within banking systems.
The platform will concern users, known as “mules” or “droppers,” who assist in suspicious transactions through a personal account. Most of these activities include withdrawing funds for illicit business, online gambling, and unregulated or unlicensed virtual currency exchanges.
Bogdan Shablya, the head of the Financial Monitoring and Currency Control Service with the Central Bank, noted that such operations must become economically unprofitable through this platform. To control all these activities, this system blocks any form of activity right from the account opening level, indicating to people that these activities are not welcome.
“This is not just an improvement of prior KYC practices,” Shablya said. The mechanism is designed to regulate personal accounts proactively to prevent their usage for unlawful activity.
AI-Powered System Targets High-Risk Accounts For Security
The platform will be intelligent enough to use artificial intelligence and analytical data to detect new suspicious transactions instantly. Unlike other Know Your Client (KYC) systems that commonly target business profiles and conduct monitoring only when something suspicious has occurred, the automated threat profiling system will identify threats at an individual level.
It will also mean that participating banks will share access to different details based on any person deemed to be high-risk. This way, the flagged people cannot easily evade measures by registering accounts at other banks that might be smaller or less keen.
The Central Bank points out that cashing out through accounts still poses a challenge, with checks amounting to 44.9 billion rubles ($584 million) sent through accounts in 2023. To minimize this volume, the new proposed platform excludes such persons from accessing banking facilities in the first place.
But Shablya pointed to the problem, which was the required equilibrium between security and the rights of the citizens. ‘We have to keep checking that the measures are not harming genuine account holders,’ he said. The framework for a rehabilitation procedure has already been made to appeal against and regain the basic banking facilities in case of misidentification of the flagged persons.
According to the latest information, Sber, VTB, and Post Bank are among the large credit organizations that have converged on supporting the initiative. People from Sber stressed that big institutions already have all the tools to detect illicit action. However, this is easier said than done; small banks seldom have the funds to monitor such types of risk adequately.
Some opponents of theistema have questioned its capacity to produce false positives and what may happen to those targeted for such. The Central Bank has recognized these risks and is currently developing means to protect against incidents that may severely impact users.
This new surveillance platform reflects the growing clampdown on cryptocurrency within Russia. Late last year, the government declared that cryptocurrency mining would be prohibited in 10 areas starting in January 2025.
🇷🇺 The Russian government has approved a decree banning cryptocurrency mining in 10 regions from January 1, 2025, according to TASS. #CryptoMining #Russia https://t.co/CIaaIZFypk
— Cryptonews.com (@cryptonews) December 24, 2024
The platform is still in its pre-beta phase and has not announced an official public release date yet. However, it is largely symbolic of Russia’s attempts to protect its financial systems from the dark side while still trying to decide on cryptocurrencies.
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