Lawyer explains the legality of blocking bank accounts for cryptocurrency operations

Russian banks have the right to limit customers’ access to their services if they conduct cryptocurrency operations and refuse to confirm the source of their funds. This was stated in a ForkLog comment by GMT Legal managing partner Andrey Tugarin.

According to him, financial institutions rely on several regulatory acts. Under 115-FZ the bank may block customer accounts to counter money laundering and the financing of terrorism. The lawyer also cited the Methodological Recommendations and the Bank of Russia Directive, clarifying the criteria for suspicious operations on bank accounts and actions to curb them.

In these documents, cryptocurrency operations are classified as suspicious.

“Only after these documents came into force did the number of blockages due to cryptocurrency operations increase. At the same time, one can expect a further rise in such cases, given the current rhetoric of the Bank of Russia regarding cryptocurrencies,” said the lawyer.

Tugarin stressed that a bank has the right to request screenshots of a client299s personal exchange account, since this is one of the simplest and legal ways to confirm the economic sense of the operations and the source of funds.

“For this, the client must be verified on such an exchange to accurately establish that the funds belong to him,” he clarified.

At the same time, the bank is not entitled to require a client to provide screenshots of a third-party counterparty’s exchange account, as such information is confidential under 149-FZ. This would exceed the powers conferred by 115-FZ.

Bank clients engaging in cryptocurrency operations should carefully study the rights and duties of individuals and financial institutions contained in the listed acts. The same documents also provide a full list of suspicious operations that could trigger an account block.

Completing verification on exchanges will help the client prove that the account, funds, and operations belong to him. The lawyer also advised cryptocurrency holders to have justification and proof of the source of funds and the economic rationale of the transactions.

“By complying with all of the above recommendations, the chances of successfully unblocking the account rise significantly,” added Andrey Tugarin.

Recently, Indefibank CEO Sergei Mendeleev posted on Facebook a screenshot of a letter in which Tinkoff Bank asked a client for documents relating to “crypto-exchange operations” conducted using accounts. Mendeleev said such requests had been received by “dozens” of his acquaintances.

In the post’s comments, the bank’s official representative confirmed that such requests are quite possible under the law and regulator requirements.

Among the documents requested:

• income-verification certificates (2-NDFL, 3-NDFL), declarations, etc.;
• explanations of the economic rationale behind the operations;
• detailed information about cryptocurrency operations—dates and amounts of transactions related to buying and selling digital assets, as well as documents confirming tax payments;
• certified screenshots from personal wallets on crypto platforms that identify the owner, and screenshots of statements from exchange accounts;
• proofs of verification of personal accounts on cryptocurrency exchanges;
• notarised checks or statements for the three most recent cryptocurrency transactions.

A Tinkoff representative added that, if the information is not provided, a client may be restricted from remote banking services.

ForkLog sought comment from Tinkoff and users who received the mailing.

In September, the Bank of Russia classified operations with crypto exchangers as suspicious and urged banks to conduct thorough monitoring. In case of suspicion of money laundering, banks are advised to block the client’s transactions and even terminate the contract.

The regulator also announced plans to develop a mechanism for blocking payments toward crypto exchanges and exchangers.

In 2018, cryptocurrencies were recognised as a high-risk factor for Russia’s financial space. The discussion on regulating virtual currency exchangers was due to conclude in 2022.

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