Russia plans to correct accounts unfairly blocked due to excessive cryptocurrency enforcement

Russian regulators are launching a “rehabilitation mechanism” for crypto traders who are mistakenly identified as common criminals due to the nature of their transactions.

Authorities in Moscow are trying to curb widespread fraud with new measures that are also affecting crypto users. Certainly the system needs some tweaking.

Russia moves to unblock bank accounts used for cryptocurrency exchanges

The Central Bank of Russia (CBR), in close cooperation with the Ministry of Internal Affairs (MVD), has started implementing steps to unfreeze the assets of people dealing with cryptocurrencies.

Regular customers of the bank have complained that their accounts have been blocked based on suspected fraud, when in fact the transfers were simply related to cryptocurrency transactions.

Financial authorities have introduced mechanisms to rehabilitate law-abiding citizens, head of the information security department Vadim Uvarov announced at the Anti-Fraud Russia conference.

At an event held this week, the official reminded that, according to current law, anyone who is mistakenly added to the bank’s fraudster database can apply to be removed.

Businesses can review the legality and legitimacy of blacklisting by consulting their banking service provider or directly with the Bank of Russia, business daily Vedomosti noted in a report.

However, CBR officials revealed that many of these applications are still being rejected. On Friday, TASS quoted him as saying:

“What we can say right away is that the Bank of Russia does not respond to most of the requests it receives. Most of the people who end up in the database have good reasons.”

Uvarov emphasized that most of the people who contact regulators with complaints of this type are young people between the ages of 15 and 24, who make up the majority of the names on the list and are often the targets of police investigations.

Nevertheless, he stated positively that rehabilitation mechanisms are already working, and urged affected citizens who believe they have been involved in suspicious activities without their consent to contact the MVD to resolve their issues.

Bank of Russia plans to fine-tune restructuring process

Vadim Uvarov also revealed that the central bank intends to “strengthen” the rehabilitation mechanism and “clean up the database a little”, as financial authorities currently receive up to 1,000 such complaints every day.

A few weeks ago, in mid-November, CBR Governor Elvira Nabiullina herself admitted that this avalanche of appeals showed that there had been too much in the fight against fraudsters.

He acknowledged that although the authorities receive fewer signals about fraudulent schemes, the number of complaints about unjustified blockades of bank accounts has increased and expressed hope that the problem will eventually be resolved.

Russia has enacted a series of laws this year aimed at targeting financial flows resulting from fraud, fraud and money laundering, including cryptocurrencies.

As part of these efforts, the Bank of Russia announced that it plans to launch a so-called “anti-drop” platform. In Russian slang, the word “drop” or “dropper” is used to refer to a person who is exploited by criminals, sometimes without realizing it.

Funds stolen from fraud victims are often converted to or from virtual currency using bank cards and accounts registered in the names of these “money mules.” Russian banks are trying to quickly detect and freeze these types of transactions.

Multiple transfers, usually small amounts, involving accounts owned by the same person, are often flagged as suspicious by automated systems and each account is blocked.

Critics have warned that this and other measures, such as restrictions on cash withdrawals at ATMs, will not only affect scammers, but also crypto traders in general, especially those who trade digital coins on a peer-to-peer basis.