LOCAL

Nathan Toohey

Cashed-up travellers will have some explaining to do at the nation's borders if the Federal Customs Service's recently proposed legislative changes are put into practice.

Those entering the country with more than the equivalent of $10,000 in cash, traveller's cheques, bonds and the like would be required not only to provide a written declaration for the money but also provide an explanation of intended use and recipient as well as documents confirming its source, according to the amendment. Currently, travellers are only required to declare the money at customs.

"Publication of the corresponding federal law will bring Russian currency-control laws in line with international legislation and identify cases of cash being brought into Russian territory for the purposes of financing terrorism and laundering money from criminal sources," said a statement published on the Federal Customs Service web site.

The international intergovernmental body Financial Action Task Force, which was created to fight money laundering and terrorist financing, suggested in 2004 that governments adopt various measure to fight cash couriers. Among the recommendations was the introduction of a declaration system, which mandates that "all persons making a physical cross-border transportation of currency or bearer negotiable instruments, which are of a value exceeding a pre-set, maximum threshold of EUR/USD 15,000, are required to submit a truthful declaration to the designated competent authorities."

At present, European Union member countries require a cash declaration for sums over 10,000 euros. As part of the declaration, travellers must declare the origins, intended use and intended recipients of the cash.

The Federal Customs Service's proposed amendment would go one step further, requiring documentation confirming the origins of the cash.

"The types of documents confirming the source of the roubles or foreign currency being brought into Russia could be documents confirming property sales, inheritance, gifts, cash withdrawal from an account at credit organisations and so on," said a statement published on the Federal Customs Service web site. The amendment would come into force six months after its adoption.

Dmitry Yanin, head of the Confederation of Consumer Societies, said that the suggested measures were quite reasonable.

"Customs services can and do have the right to gather this information - no citizens' rights are being violated here," RIA Novosti quoted Yanin as saying. He did not exclude the possibility that people would provide incorrect information such as that the money was intended for a sick grandmother, when in reality its purpose was less innocent.

"In such a case no one would check the information. But if, for example, a person brings in money this way once a week, customs may well enquire how many sick grandmothers he has," said Yanin.

"As concerns documents confirming the source of the funds, I do not see anything criminal or any citizens' rights being threatened," Yanin added. "But it is important at the same time to prevent any individual's personal information being leaked, as often happens here. The customs service needs to explain how they plan to protect this information."

Besides tightening the declaration requirements, the Federal Customs Service has proposed an increase in fines. Currently, the fines for failing to make a declaration or making a false declaration are 500-1,000 roubles for individuals, 1,000-2,000 roubles for officials and 5,000-10,000 for legal entities.

Banks set to be the sole money changers

The Central Bank may be planning amendments to banking laws that would allow currency exchange points to operate only within banks.

The move was necessary to fight increasingly fraudulent practices conducted by some exchange booths, or "huts on chicken legs", Rossiiskaya Gazeta quoted Pavel Medvedev, a member of the State Duma's Financial Markets Committee, as saying.

"Not possessing a licence, fraudsters present themselves as a respectable bank," said Medvedev. "They cook up some documents, sublet premises for their exchange point in a busy location and the landlords can not be held responsible." He added that besides the losses to customers defrauded by dishonest exchange points, legitimate banks could not compete on an equal footing with them since the fraudulent exchange points paid no taxes.