In order to counteract money laundering, banks exercise control over the operations of their clients and are obliged to report information on all suspicious transactions to Federal Financial Monitoring Service (under the provisions of Art. 7 of the Federal Law of 07.08.2001 No. 115-FZ "On Counteracting the Legalization (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism")
The criteria for classifying a transaction as suspicious are determined by the banks themselves. For example, criteria may include:
- an atypically large transaction amount,
- the transaction does not meet the goals of the organization,
- the confusing nature of the transaction without an obvious economic basis,
- unreasonable haste in carrying out the operation that the client insists on
and so on.
In order to properly qualify transactions as suspicious, banks have the right to:
- request documents and information from the client (for example, about the operation being carried out, the source of funds, about counterparties, business operation itself, etc.), use other sources of information.
- set a deadline for the submission of the requested documents and information (under the terms of an agreement and the internal rules of the bank).
- invite the client to an interview in order to clarify details.
- visit the client's business.
- restrict access to remote banking services.
- give recommendations regarding the operation.
If suspicions regarding operations have not been eliminated, bank has the right to refuse to carry out the operation or suspend all operations on the account. Then the bank is obliged to report the refusal to Federal Financial Monitoring Service, which accumulates information from all banks and transmits it to the Central Bank of Russia (CBR). Based on the information received, the CBR makes a decision to include the organization in the so-called "black list". Such inclusion may serve as a basis for banks to refuse to open accounts for the organization.
It is important that in order not to get into the black list, you need to correctly interact with your bank, respond to all its requests and provide the necessary documents.
TEAM strongly recommends to record any interaction with bank employees. Requests and responses to the bank's requests should be made in writing and submitted to the Bank's branch, so that a copy of such request is marked with the date and incoming number. If the request or response were received via the remote bank service chat, then you should regularly make screen shots of the chat with the Bank employee, which show the time and date of the messages. Otherwise, it will be difficult to prove the illegality of your Bank's actions, since access to the chat may be blocked.
How to avoid refusal to carry out an operation and suspension of account transactions? Let's consider 3 situations.
1. Bank requested documents confirming the transactions. Access to on-line banking and the transactions remain.
Request for documents is the first signal that the bank has suspicions about your transactions. It is in your interests to eliminate these suspicions by providing the necessary documents at the first request of the bank.
You may be requested to provide in support of your operation following documents:
- a description your business’ specifics,
- the organization's management structure,
- the scheme of operations, justification of their economic essence,
- information about the source of funds, accounting statements, etc.
If you have received a request from the bank indicating the list of required documents and the deadline for its submission, then you should not ignore it. Try to provide all requested documents on time. If the deadline is insufficient you better send a part of the documents and a cover letter with a request to provide time for collecting the rest of the documentation and justification of the reasons for the, let’s say, delay. The reasons may be following: "it takes time to request documents from the counterparty", "the necessary documents are stored in another department", etc. Your activeness will help you gain some time and reduce the risks of a sudden suspension of operations and blocking of access to on-line banking.
Bank shall answer you considering your documents and information within 10 working days. It may request additional documents or inform you that the issue has been resolved.
2. Bank refuses transactions or suspends access to on-line banking and requests confirming documents.
The procedure is similar to that described above.
You should provide all related documents that are indicated in the bank's request. Bank shall answer you considering your documents and information within 10 working days. If in its answer bank still refuses you, but you are sure there is no grounds to limit you operations and on-line banking access, you may appeal bank’s decision to the Interdepartmental Commission at the Bank of Russia and to the court.
3. The bank refuses operations or suspends access to on-line banking, but does not explain the reasons of the refusal and does not request documents that could clarify details.
First of all, you should find out the reasons of the refusal by sending a written request to the bank to provide information with reference to clause 13.4 of Article 7 of Federal Law No. 115-FZ. (Example of text: “I ask you to provide the reasons that served as the basis for refusing to conduct the operation”).
As soon as you get the response from the bank you shall by your own initiative submit all the documents confirming there is no grounds for the refusal. You may chose documents on your own remembering the goal, which is to prove the bank its decision was wrong. You should show you are reliable participant of the market, running a busines in a proper manner and file correct accounts.
TEAM hopes that this article will help you in resolving issues that may arise when working with banks.
If you are faced with illegal actions, your operations have been suspended or refused, please contact TEAM. Our experts will be happy to assist in drafting requests, complaints and other appeals to the bank, Interdepartmental Commission at the Bank of Russia or court in order to protect your rights and interests.
Author: Julia Dogadina, Associate of TEAM