Russian authorities crack down on illegal currency trading

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Russian authorities are cracking down on private cash foreign currency trading.

Personal transactions are fast fading into obscurity after the Central Bank banned the sale of dollars and euros in banks and exchange offices. The Central Bank has also banned people from withdrawing more than the cash equivalent of $10,000 from their Russian bank accounts.

According to RBC news site, the Federal Tax Service and the Ministry of Internal Affairs asked local authorities to find out about illegal currency sales traded on Telegram, social networks and through personal ads.

Currency transactions carried out outside banks pose a “threat to the stability” of the ruble and the “stability of the foreign exchange market”, the Federal Tax Service wrote in a letter to local tax authorities.

An inter-ministerial cooperation agreement signed in 2010 enables local police to help unmask “clandestine currency traffickers”.

Currency transactions outside authorized banks constitute an administrative offence. Offenders Face a fine of 75% to 100% of the amount of the illegal transaction or even confiscation of the full amount by court order.

Major foreign exchange dealers who sell at rates higher than official exchange rates face criminal liability.

“If the trader makes a profit of more than 2.25 million rubles from his sales, he can also be sued <...> by virtue of 172 of the Penal Code for illegal banking activities,” Yuri Fedyukin, managing partner of legal film Enterprise Legal Solutions, told the Moscow Times. “The penalty is imprisonment for up to four years. It can be up to seven years if his income exceeds 9 million rubles,” he said.

For administrative violations, the seller and the buyer are liable, he said.

The Central Bank introduced tough currency restrictions on March 9 after Western countries froze Russia’s international reserves and the US and EU halted cash transfers of dollars and euros to Russia .

The restrictions were introduced after a series of currency withdrawals from Russian banks.

According to the Central Bank, private customers withdrew $9 billion from their accounts and deposits in February, an all-time high in the history of available statistics.

The largest increase in withdrawals took place in the last days of the month, after the start of the war in Ukraine.

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