Russian anti-money laundering legislation in electronic payments: A case of regulation catching up with business practices
Jul 19 2013
During its plenary session in June 2013 in Oslo, the Financial Action Task Force (FATF) approved the Guidance on Risk-Based Approach to Prepaid Cards, Mobile Payments and Internet-based Internet Payment Systems which is aimed at assisting jurisdictions in devising necessary risk-based measures towards New Payment Methods (NPMs). FATF once again demonstrated consistency in calling countries for moving away from ‘one-size-fits-all’ approach (para 90). However, the jury is still out on what size exactly fits whom. Therefore, this article is aimed at filling the knowledge gap on national risk-based Anti-Money Laundering/Combating Terrorist Financing (AML/CFT) approaches towards NPMs. Such an exercise can be useful not only as a part of exchanging similar experiences among jurisdictions but also to find risk-mitigating approaches which are still disregarded by the national authorities but can be of great importance for achieving AML/CFT goals. In this article, we present the case of Russia, which is one of the most developed markets for new payment technologies with a very specific and elaborated legal framework for this sector. In the first part, we give a short overview of the Russian electronic payment market describing major products that are widely used in the country. Secondly, we discuss the specifics of the Russian regulation towards NPMs and the AML/CFT legal framework that has been developed for the financial sector. The next part is dedicated to the identification approaches and risk-mitigating measures that are now employed by the payment operators. We believe that with rather conservative legislation in place, companies employ effective risk-mitigating measures for their own business purposes (eg combating fraud) even though they are not considered a part of compliance policy by the authorities. Therefore, when devising new risk-based effective AML/CFT tools, legislators should be encouraged to look at existing business practices instead of following the less effective path of designing new requirements or carrying them over from other sectors or financial products.
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