Russian banks counteract to president Putin - FFC Media
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Russian banks counteract to president Putin

FFC Media spoke with several foreign entrepreneurs who responded to an invitation from the Russian authorities to “do business in Russia.” Such invitations are generously heard at international summits, which Russia is actively holding in order to draw new countries into its orbit of influence.

Our first hero is an African entrepreneur who decided to open his company’s daughter in Russia after the Russia‐Africa summit. He told how the services of Russian banks look like a foreigner. This is similar to robbery, flavored with industrial espionage, only for the sake of decency covered by the term “banking services”.

At the summit in Sochi, we are called to do business in Russia, and there banks are blocking accounts and taking money!” This is not the Russia that President Putin is talking about, ”complains an African businessman.

Russia calling for foreign entrepreneurs

In October 2019, the first Summit and the Russia‐Africa Economic Forum took place in Sochi (Russia). The summit brought together the heads of 70 African states. As a result of the summit, they adopted a declaration in which they agreed «to support Russian and African entrepreneurs in exploring ways for mutually beneficial coöperation» (paragraph 24).

The Russian Federation expressed its “desire to coöperate with African states in the areas of trade, industry and investment facilitation” (ibid.).

African businessmen rushed to Russia, and here they were waiting for banks with open arms, rubbing their sweaty palms. But first things first.

Well, try to open an account

To open an account, Russian banks request a fairly large list of documents. All documents must be read and filled out in Russian, the terminology is not explained, and the opening process itself is confused. Even the largest Russian banks — Sberbank, VTB, Promsvyazbank — do not even support generally accepted English. Everywhere you need a translator.

Small businesses from abroad have to seriously sweat. Bank employees do not speak English, questionnaires and documents have to be translated into Russian and notarized before being submitted to the bank. The situation is repeated as many times as many times the bank employees “remember” that they forgot to request some more documents, or “understand” that they can request some more help.

But even when the misadventures of opening an account end, no less interesting begins.

The yours became ours

According to Russian law, before becoming the head of his company in Russia, a foreigner must obtain a work visa. However, before obtaining a work visa, a foreigner must open a company — attention! — with the Russian manager. It turns out that from the moment the company was opened until the foreigner takes office (after receiving a work visa), the company’s accounts are in the hands of the Russian manager. The company’s accounts for the owner during this period become unavailable, control over the company is lost.

We know that Russians are smart. You have the best science.” — says a businessman from Africa. “And when the Russians do something, they do it deliberately.” Therefore, we have no doubt that the hole in your legislation is not accidental. It is also no coincidence that there is no support for banking services in foreign languages. It is also no coincidence that any control mechanisms are missing. Everything is logical. We understand that this is a “bookmark” that works flawlessly to take money from careless foreigners, ” — says an African entrepreneur.

Under the compliance is conducted industrial espionage

When a non‐resident entrepreneur opens an account with a Russian bank, he is almost guaranteed to receive a request from the compliance control service. This is the official intrabank structure, which is authorized to detect illegal money laundering and suppress terrorist financing.
Russian banks are required to verify financial transactions in accordance with Federal Law 115‐ФЗ On Combating the Legalization (Laundering) of Proceeds of Crime and the Financing of Terrorism of August 7, 2001. However, as a mandatory audit it turns into a robbery tool — more on that below.

Compliance control asks a foreign entrepreneur about all financial transactions that take place on his current account. In fact, all business contracts, supporting documents, invoices, balance sheets are requested — everything that characterizes the client’s business.

It looks like industrial espionage, and not like financial monitoring,” — says another friend of ours, an entrepreneur from Montenegro. «According to the information that I was asked, you can understand how my business works. I am asked about my business partners, asked to give product specifications, and other documents that are not related to banking services. You can copy my business, or intercept my customers! I know that my friends fell into such situations. Their business was copied after they disclosed information about their activities to Russian banks. Then they went broke.» — he spoke.

Under the guise of the anti‐money laundering law, there are other iniquities.

Robbery after opening an account

Now about how the act of robbery occurs,” our African friend continues. – If you are lucky to register a company, open an account and not lose a business, do not think that you have overcome all the barriers. You have just returned to the starting position for a fight with the bank. Now try to deposit money into your account and start using it.

Before crediting money from abroad, banks require you to coördinate the transaction. This means full translation into Russian and certified statements on the origin of the money. However, even if you provide all the documents and obtain prior consent for admission, banks still do not guarantee that they will not block the funds received. Here is a real life example.

A respectable foreign businessman serving the state’s technical infrastructure in his country, believed the calls of the President of Russia, and decided to open a company in Russia. He transferred several million dollars to the company’s account in Sberbank, received the immigration status of a highly qualified specialist, and, it would seem, did not bode well. However, the «banco‐banditos» from Sberbank, as he now half‐jokingly calls them, showed themselves in all its glory.

Vainly considering himself an experienced, the businessman previously enlisted the guarantees of the client manager of Sberbank that the transaction was acceptable. In vain, the businessman’s lawyer confirmed that the operation does not violate Russian law. In vain did the accountant prepare copies of all contracts and supporting documents. The invisible compliance hand blocked the business at Sberbank first, and after a few days, the businessman’s personal account, without explaining the reasons. The situation shocked the businessman.

Sberbank informed the businessman that he suspected him of financing terrorism and laundering illegal proceeds. To the repeated question about the reason for the suspicions, he received the same answer that the bank’s compliance didn’t give “certificates” and did not comment on its actions.

The first and only transaction in the account - the transfer of money of this businessman from the settlement account of his own company to his personal account has been studied by Sberbank for two months. After six (!) Requests of the same documents, the bank decided that the transaction was suspicious and blocked access to accounts – Ffc media

«My source of income is the execution of state contracts of a country friendly to Russia. I provided all the documents to Sberbank in advance. Our country is a strategic partner of the Russian Federation and does not sponsor terrorism. I went through security checks. What information does Sberbank have that the intelligence services of my country do not have? What gives Sberbank the right to suspect me of sponsoring terrorism? Why do bank experts promise to call back and not call back? Why do not respond to electronic inquiries? Why does a representative of Sberbank say one thing, and a compliance office does another? Why are the same documents requested for the sixth time? Why does the investigation of one transaction last more than two months? But what if there would be six transactions — this means a year of investigation and thirty‐six requests for documents ?!» — asks the businessman. But these seem to be rhetorical questions.

«I have been working in the jurisdictions of different countries for many years, but have not yet encountered such lawlessness. Firstly, unfounded suspicions are a blow to my honor, dignity, and reputation. Secondly, this is a direct violation by the Bank of the Russian Constitution, which clearly spells out the protection of the right to dignity, the right to entrepreneurial activity, the right to familiarize oneself with documents directly affecting the restriction of human rights and freedoms. Thirdly, there is every reason to believe that the fight against terrorism for banks is a way of gain through which banks receive super‐profit. After all, if the bank were really interested in the fight against terrorism and the laundering of illegal funds, it would transfer cases to the investigating authorities, with all the evidence. Instead, the bank is ready to withdraw the arrest from the account for 20% of the arrested amount. Can this be called the fight against terrorism?»

«For us, foreigners, it is obvious that for Russian banks the “fight against terrorism” is just a tool for weaning money. Banks do not have an evidence base for the corpus delicti, and the system is structured in such a way that the bank, in one person, is a judge, a prosecutor, and a beneficiary of its own actions. This is a banal robbery,» — says businessman.

Under the guise of the Central Bank

Banking terrorism takes place under the guise of a regulator — the Central Bank of the Russian Federation.

The Russian banking regulator — the Bank of Russia — recommends that it is better for a bank to mistakenly close an account (or rob an entrepreneur) than God forbid to make a mistake and accidentally “serve” a terrorist.

The banking supervision system in Russia is built on a closed loop. The supervisor who checks the validity of banks” requirements for customers is the Central Bank itself. But the Central Bank exists above the law, and is not subject to the Constitution of the Russian Federation. Moreover, it is the regulator that sends the signal to the banks: «it is better to rob an entrepreneur than to make a mistake with a terrorist.» Nowhere to complain about banks — just go to court. However, if the income level does not allow the businessman to hire a serious law office, then he does not have the right to defense.

And here is the commercial component of this “compliance”: the banks, abusing their powers, sell information about blocked accounts to gray intermediary structures. They come to businessmen who are tired of fighting with banks, and for a commission of 20 to 50% they organize the unlocking of accounts and the withdrawal of funds. Such structures conspire with bank employees. Their schemes look legal, and they withdraw assets that have been seized from banks. Everyone knows about this, except for the structures responsible for the capture of such crooks. These structures of crime are not found in this, and this topic continues to flourish.

Meanwhile, the head of Sberbank, German Gref, in the program “Open Dialogue” on the RBC channel on November 25, 2019, said that he knew about information leaks and even pleaded guilty. But for foreign entrepreneurs, nothing has changed.

Judge and prosecutor all rolled into one

The most sad thing is that it is impossible to calculate the number of victims of banking terrorism, such statistics are not the regulator, they are not kept by the industry. The reasons are also clear. If there is no “body”, then there is no corpus delicti.
“It’s just a gangster mess,” says our acquaintance African businessman. — At home, we call such bankers «bankers.» Not only did banks rob and continue to rob populations through defaults, inflation, and interest rates. Now they simply rob us directly, according to the principle “what sticks to our hands is ours,” the entrepreneur continues.

«I am shocked by the very essence of this law (115‐FZ — FFC Media)! The bank suspects me of something, and he himself determines the legitimacy of the suspicion. That is, in Russia, any bank — and the judge, and the prosecutor all rolled into one! And there really is no one to complain about. The Central Bank itself is not subject to the Constitution, and requires banks to violate the Constitution, too, ”he resents. And the oversight body for the protection of the Constitution doesn’t even itch, — the businessman complains. (In Russia, this is the Constitutional Court — FFC Media)

Ombudsmen will not save

Alexander Lyuboserdov, the head of the working group on finance of the office of the business ombudsman of Moscow, gives fresh cases with the “strange” behavior of banks:

Promsvyazbank. When opening an account at Promsvyazbank, managers warn that upon receipt of a request under Federal Law 115, it is possible to terminate the bank agreement unilaterally (on the part of the bank), while closing the account will be charged a 20% commission on the remaining cash.

Tinkoff Bank. The client received a request from the bank under 115‐ФЗ, while the client‐bank was automatically blocked. (All communication in this case occurs exclusively online and by phone). The client, within the time specified in the request, provides a package of documents to the bank for the client‐bank. After 5 – 7 working days, he receives a letter in the mail with a recommendation to close the account, and at closing the account a 20% commission will be charged. However, when filing a complaint and pre‐trial claim, the bank closed the account without withholding a commission.

Uralsib. Cases are repeated: the client receives a request from the bank under 115‐ФЗ, the client‐bank is automatically blocked. The client, within the time specified in the request, provides a package of documents to the service department on the client bank and on paper. The bank accepts documents and sends it to the financial monitoring service, which (in practice) reviews them for 2 – 3 weeks and, as a result, recommends closing the account. Next, the manager conducts a bidding: for the bank to close the account without a mark in 115‐ФЗ, it is necessary to close the account, transfer funds to a new account in another bank, paying a commission of 20% from the balance of funds in the account. Account closure period — 7 business days. Or an alternative option is offered: pay 80,000 rubles to the bank’s cash desk “insurance”. and the account will be closed at the request of the client, without marks, without commission and on the same day. ”

The number of such cases is growing exponentially, says Tatyana Mineeva, the Moscow Commissioner for Entrepreneurs” Rights:

«So far, individual entrepreneurs perceive the demands of banks as their private disputes with banks abusing their powers, but we already […] see the system. How many people suffered from barrage tariffs? More and more often, at our meetings with entrepreneurs, the forest of hands rises in response to this question. Many businessmen experienced the blocking of accounts, followed by the demand for huge percentages, including those who worked in good faith in the market for many years, and they have never been noticed in any connection with terrorists and other criminal communities. The illegality of locks is confirmed in the subsequent and in court.»

What is the trouble

President Putin is an international speaker. One of the tasks that the Russian Federation, according to him, must solve is to take a leading place in the global economy. Including to compensate for the sanctions of Western countries, that is, to replace the outgoing goods turnover by increasing the presence of Russia in the markets of different continents.

To this end, contacts are developing with China and Asian countries. In the Middle East, contacts are maintained with Iran, in South America with Venezuela. Judging by the Sochi Summit, Africa has become another vector of progress.

Russia is trying to increase its position in the Doing Business ranking, and in every possible way demonstrates its willingness to conduct and expand its business.

But Russian commercial banks are doing everything to destroy Russia’s international reputation.

Under the guise of Law 115‐FZ, Russian banks are literally robbing foreign entrepreneurs rushing to open accounts in the Russian Federation. The number of such entrepreneurs is large, and faced with dirty banking reality, they withdraw their business from Russia.

«They say about Putin that he has iron eggs. But it seems that commercial banks hold it by these eggs with titanium tongs.» — afflicts the African.

To solve the problem we need to tighten russian banks

International experience suggests that when servicing non‐residents, banks should demonstrate at least common sense. For blocking accounts and requesting redundant documents, there must be good and reasonable reasons.
We see many cases when Russian banks act predatory against foreign entrepreneurs. This is a lawlessness that violates international business principles.
This behavior of Russian banks is compromised by the country’s political leadership, calling on international partners to do business with Russia. Moreover, this violates the presumption of innocence and the basic human rights enshrined in the Constitution of the Russian Federation. Recall these rights:

  • The right to private property (Article 35, paragraph 1).
  • the right to entrepreneurial activity (Article 34, paragraph 1),
  • the right to dignity (Article 21, paragraph 1).
  • the right to confidentiality of correspondence, telephone conversations, postal, telegraphic and other messages (Article 23, Clause 1).
  • the right to familiarize oneself with documents and materials directly affecting his rights and freedoms (Article 24, paragraph 2).

Russian banks should be especially interested in article 17 of the Constitution: In the Russian Federation, the rights and freedoms of man and citizen are recognized and guaranteed in accordance with generally recognized principles and norms of international law and in accordance with this Constitution.

Without compliance with international legal norms, Russia may forget about the impact on international politics. All her statements will remain empty words.

I wonder if President Putin knows that the actions of Russian commercial banks are working against him in the international arena?

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