authorities want to oblige banks to identify non-residents by geolocation – Kommersant

The Russian government has prepared a draft resolution that proposes to oblige Russian banks to check tax residency by geolocation. If a credit institution finds out that a person lives abroad, it will have to request proof of residence from him and transfer the data to the Federal Tax Service, they report “News” with a link to the document.

The newspaper clarified that the draft resolution was prepared by the Russian Ministry of Finance. According to the document, the bank has the right to unilaterally terminate servicing a client if he does not provide the documents requested by the credit institution.

The Ministry of Finance told Izvestia that the issue of amending the legislation will be decided following discussions with departments and members of the trade union community. The Federal Tax Service reported that the initiative may be considered inappropriate as a result of the discussion.

Currently, banks in the Russian Federation are required to request tax resident status only when concluding an agreement with a client. The resolution wants to oblige credit institutions to monitor the user’s geolocation on an ongoing basis, explained the head of the National Council of the Financial Market, Andrei Emelin, to the publication.

Vice President of the Association of Banks of Russia Alexey Voylukov told the publication that in accordance with the resolution, banks will also have to request information from clients about the presence of assets abroad if there is a suspicion of living abroad.

Mr. Voylukov said that banks are already constantly monitoring the client’s geolocation to identify cases of fraud, and the initiative expands the monitoring tasks. According to Mr. Emelin, credit institutions will have to significantly transform information systems and work algorithms to verify the residence of clients, Izvestia reports.

The NSFR’s response to the resolution, which the publication has at its disposal, states that the location indicated on the client’s phone does not always reliably reflect his geolocation. For example, people may access banking apps with VPN enabled or use proxy servers.

In addition, the conclusion emphasizes that the bank client has the right to limit the access rights of the banking application on his device. In this case, the credit institution has no right to restrict servicing the client.

Read more about the situation in the banking sector of the Russian Federation in the Kommersant material. “December turned out to be a reserve month”.

Erdni Kagaltynov