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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.

 

Who Shall Suffer From Wire Transfer Ban By Moscow

20.04.2017

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

Russia banned money transfers to Ukraine. What impact shall it have on Ukrainians working in the Russian Federation and on the Ukrainian businessmen?

On February 22, 2017, State Duma of the Russian Federation approved in a first reading a draft law on the issues of cross-boarder wire transfers by individuals without the opening of bank accounts.

This draft law offers to prohibit the wire transfer operators to conduct cross-boarder transfers without the opening of bank accounts out of the payment system network to include the foreign ones.

Moreover, measures are being introduced to eliminate the negative consequences that arise when foreign countries impose a ban on the Russian payment systems’ operations on their territory.

In this situation, to protect the interests of payment system operators and payment infrastructure service providers, directly or indirectly under the control of the Russian legal entities, it is proposed to limit the possibility the payments’ transfer through foreign payment systems.

This draft law is a tit-for-tat measure. In 2016 the National Bank of Ukraine banned the operations of the Russian payment systems Kolibri, Golden Crown, Unistream, Anelik, Blizko in the territory of Ukraine.

According to the authors of the draft law, this ban limited the competition in the Russian market of payment services implemented in the form of cross-border transfers without opening the account, in favor of foreign payment systems.

This draft law prohibits the wire transfers from Russia to Ukraine without opening a bank account through foreign money transfer systems.

First of all, such restrictions will affect the most popular international payment systems Western Union and MoneyGram, which, after the NBU banned the transactions, gained advantages in the operations within the corridor Ukraine-Russia-Ukraine.

Such a ban shall affect, first of all, the citizens of Ukraine, temporarily residing in Russia, and this is about 4.5 million people. This shall mean the termination of the legal transfer of money by Ukrainian citizens working in the Russian Federation to Ukraine. According to careful estimates this is $ 1 billion a year.

It is no secret that Ukrainian citizens who work in Russia most frequently use Western Union and MoneyGram systems to transfer money to their homes, as well as so-called urgent money transfer systems.

Now Ukrainians will be forced to look for more expensive, less effective or less legal means of transferring funds, since for many of them the opening of a current account will be troublesome.

The need in opening the bank account, inter alia, shall mean the transparency of information on who and how much funds transfers outside the Russian Federation that is unlikely to be acceptable for those who work illegally.

The operators will hardly breach the law, otherwise the fine will be imposed on them in the amount of the payment that the Bank of Russia will charge. Moreover, even before voting for the draft law, some Russian banks refused to make any money transfers to Ukraine — even through Western Union.

In this situation, Ukrainian entrepreneurs, working with Russian counterparts, will also suffer. This can provoke the development of the shadow market of services for money transfers to Ukraine, the cost of which will be much higher, and the efficiency — highly questionable.

In any case, consumers of the respective services will suffer the most from such restrictions, and not their suppliers, as well as the financial system as a whole, for which any inflow of currency into the country is important.

 
© 2017 Ilyashev & Partners / Mobile version