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Money Transfers: Russia Is Preparing to Strike Back


Oleksandr Vygovskyy, attorney at Ilyashev & Partners Law Firm
Source: European Pravda

The National Bank of Ukraine has blocked a number of Russian payment systems and now the Russian Federation may banned money transfers from Russia to Ukraine without opening a bank account. The question is: who is going to suffer most?

On November 02, 2016 the National Bank of Ukraine issued a letter No. 57-0002/90626 “On the activities of certain payment systems and systems of settlement”.

In its letter the banking regulator reminded the participants of international payment systems: Zolota Korona, BLIZKO, International Money Transfers “Lider”, Anelik, Unistream, and Colibri (previously “Blitz”) on application of one-year sanctions towards financial organizations operating such systems.

The National Bank of Ukraine is highly worried that the users are taking advantage (the same way as before) of replenishing the digital wallets such as Webmoney, Yandex.Money, QIWI Wallet, Wallet one and others.

Article 15 of the Law of Ukraine “On payment systems and transfer of money in Ukraine” as of April 05, 2001, according to which only the bank has the right to issue digital money, serves as the formal reason for introduction of the ban.

At the same time the bank, which has an intention to issue the digital money, is obliged (prior to commencement of such issue) to receive the NBU’s approval of the money use provisions established by the regulator itself.

According to the provisions related to the digital money the issuer, operator, agents, traders and users are obliged to carry out operations with digital money under the digital money use provisions approved by the NBU.

As soon as the provisions related to the use digital money issued under the mentioned trademarks were not approved by the NBU, provision of services related to their use was banned.

The regulator informed that the National Bank approved the rules of the national system of settlements,, which do not constitute the provisions of use of the digital money and do not contain a description of operations with digital money.

The NBU also reminded that the list of the national and international payment systems, which have the right to operate in Ukraine, as well as the list of banks, which have the right to issue digital money, may be reviewed at the web-site of the NBU in the section “Payment systems and settlements”.

At the same time the mentioned measures of the regulator do not imply impossibility of carrying out monetary transactions between Ukraine and the Russian Federation. Any person may use the services of an international payment system which has not fallen under the sanctions. As before the interbank transfers are not banned, as well as withdrawal of cash in Ukraine from a bank card issued by a Russian bank, and visa versa.

The mentioned measures give an impression about redivision of the market of monetary transfers by pushing out the Russian players which is beneficial, first and foremost, for other foreign payment systems, such as Western Union and Moneygram.

The interests of the Russian payment systems turned to be violated along the whole “corridor”: Russia-Ukraine-Russia, which is now actually being absorbed by the payment systems of other foreign countries.

Corresponding prohibitive measures will not likely be long in coming. Now Russian authorities consider introduction of prohibition to transfer moneys from the Russian Federation to Ukraine via international transfer systems without opening a bank accounts.

If it becomes a reality a lawful channel of transferring the money by Ukrainian citizens living in the Russian Federation will be closed. The sum transferred by Ukrainian guest workers to Ukraine from the Russian Federation constitutes over one billion US dollars a year.

It will turn out that the prohibition introduced by the Ukrainian regulator will harm, in the first place, Ukrainian citizens who temporarily reside in the Russian Federation. They will have to seek other (more expensive, less effective or less legal) ways of transferring the money to their relatives in Ukraine.

In any case it is the consumers, and not the suppliers of the corresponding services, who will be harmed most of all.

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