The Central Bank is actively removing banks from the market for illegal transfers of funds

The pause in the revocation of banking licenses, which lasted throughout last year, has apparently ended. In less than three months of 2024, the third bank lost its license, which is the same amount as in the entire 2022. The Bank of Russia is demonstrating a tough position towards market participants who decide to engage in illegal payment traffic. It is the conduct of illegal payments, especially between individuals, that is now the focus of the Central Bank’s attention and serves as the main basis for extreme supervisory measures.

On Friday, March 22, the Bank of Russia revoked the license of Strela Bank (321st place in terms of assets). The regulator motivated such tough measures by the fact that the credit institution violated federal laws and regulations governing banking activities, as well as regulatory rules “in the field of combating the legalization (laundering) of proceeds from crime and the financing of terrorism.”

In addition, according to the Central Bank, the bank “specialized” in transfers between Qiwi Bank, which recently lost its license (see Kommersant on February 22) and other participants in the banking services market. Significant volumes of such transactions were aimed “at ensuring settlements between individuals and shadow businesses (transfers of funds in favor of crypto exchangers, illegal online casinos, bookmakers) and were high-risk,” the regulator points out.

In less than three months of 2024, the Bank of Russia has already revoked the bank’s third license. Moreover, in all cases, the regulator pointed out violations of the requirements of the AML/CFT legislation. The most high-profile case was the revocation of the license of Qiwi Bank, one of the top 100. According to Kommersant’s sources (see Kommersant on March 18), after the cessation of Qiwi Bank’s work, the traffic of “ambiguous payments” shifted to the CIS countries, primarily to Uzbekistan and Tajikistan. Among the specific participants in the movement of funds, they named the Uzbek Oktobank and the Tajik Amonatbank.

In 2023, the Central Bank did not revoke a single license, and in the entire 2022, three credit organizations lost their licenses. At the beginning of March this year, First Deputy Chairman of the Central Bank Dmitry Tulin emphasized that there was no moratorium on license revocations – banks “simply did not give reasons.” At the same time, Deputy Chairman of the Bank of Russia Olga Polyakova said that the “number one” focus for supervision for this year is “high-risk transactions,” mentioning droppers (dummy persons into whose accounts stolen funds are transferred) and dubious transfers between individuals. Chairman of the Bank of Russia Elvira Nabiullina, at a press conference following a meeting of the board of directors of the key rate regulator on March 22, noted that, despite the general decrease in the volume of questionable transactions, the Central Bank has recently seen the increased role of such a channel as P2P in these transactions. According to her, the market for dubious transactions is quite “mobile”, moving from one form to another, so the Central Bank “analyzes the entire market in order to block such channels.”

According to Ivan Uklein, senior director for bank ratings at the Expert RA agency, there is no need to talk about a “carpet” tightening of supervision over banks yet. “Rather, the licenses revoked after the pause may indicate increased attention by the regulator to certain areas of activity of settlement banks,” he believes. In this case, “the Central Bank is fighting not against shadow, semi-legal payment traffic, with the help of which sanctions are circumvented, but against illegal traffic, when it comes to the financing of terrorism, the laundering of money received from prohibited activities, tax evasion, etc. “, notes Vice-President of the Association of Russian Banks Alexey Voylukov. According to him, identifying various similar schemes is possible using the software systems available to the regulator, the recently introduced “Know Your Client” platform (fully operational from July 1, 2022), as well as through the work of analysts and data exchange with other departments and banks.

Expert RA does not yet see any reason to adjust the forecast (see Kommersant on March 4), according to which the number of banks could be reduced by 15 this year. This assessment includes cases of not only revocation of licenses, but also their voluntary surrender, as well as takeover transactions, Mr. Uklein noted. “Banks with revoked licenses, as a rule, have a very limited client base, so we do not expect any significant consequences for the banking system as a whole,” the expert concludes.

Olga Sherunkova