Federal Law 115-FZ: Reasons for Blocking Bank Accounts

Contents:

• The mechanism of action of Federal Law No. 115 and banking control over financial transactions
• Methods for checking transactions and clients in the banking sector
• What to do if your account is blocked
• How to avoid the risk of having your bank account blocked
• Key aspects of account blocking according to Federal Law No. 115 in four main points

Since 2001, Federal Law No. 115-FZ has been implemented in Russia. It is aimed at combating the legalization of illegally obtained income and preventing the financing of terrorism. According to this law, credit institutions have the right to suspend any banking transaction if they have suspicions about its legality and require the account holder to provide relevant documents for confirmation.

Various financial transactions may come under suspicion. This could apply to a situation where a person withdraws cash from a corporate account to pay wages, or a case where they transfer 10,000 rubles from their personal account to a friend as a loan. We spoke with a bank representative to find out how this process works.

In this article from the Skillbox Media Business editorial team, you can learn the following:

• Federal Law 115-FZ regulates issues related to combating money laundering and the financing of terrorism. It establishes requirements for various organizations and individual entrepreneurs regarding the monitoring of financial transactions.

  The main objective of this law is to identify and prevent suspicious transactions. It monitors operations such as large transfers of funds, opening accounts that do not match the client's profile, and cash transactions exceeding established limits.

  Financial institutions and other entities are required to identify and report such transactions to authorized bodies. This allows for effective control of financial flows and minimizes the risks associated with money laundering and the financing of terrorist activities.

• Verification of banking transactions is a process that includes several key stages. First and foremost, banks monitor transactions in real time to identify suspicious activity. Special algorithms and systems are used to analyze client behavior and identify anomalies, such as unusual amounts or frequency of transfers.

  Furthermore, all transactions are processed through a compliance system, where they are checked for compliance with current legislation and the institution's internal rules. For example, transactions may be checked for money laundering or terrorist financing.

  If necessary, banks may request additional information from clients to clarify transaction details. If suspicious activity is detected, financial institutions have the right to temporarily suspend the transaction and notify the relevant authorities.

  Thus, transaction verification in banks is carried out through a comprehensive approach that includes both automated systems and the human factor, aimed at protecting both clients and the financial system itself.

• If your account is blocked, it is important to take several steps to determine the cause and resolve the issue. First, contact the bank or financial institution where you hold your account. They can usually provide information about the reasons for the block and the steps required to unblock it.

  It's also worth checking whether you've violated the terms of service or whether there are any suspicions of fraudulent activity. If necessary, prepare documents that can prove your case, and be prepared for the fact that you may be asked additional questions.

  If the situation is not resolved quickly, consider filing a complaint with the relevant regulatory authorities. Sometimes, third-party assistance can speed up the process. It's important to stay calm and act consistently to regain access to your funds as quickly as possible.

• To prevent blocking, there are several important recommendations to consider. First of all, try to adhere to the terms and conditions of the platform or service you use. This will help avoid misunderstandings and violations that can lead to access restrictions.

  It's also important to avoid suspicious activity, such as mass messaging or using unauthorized programs. It's also worth monitoring the security of your account: use complex passwords and two-factor authentication, if possible.

  Regularly check your activity and pay attention to any warnings or notifications from administrators. If you encounter any problems, don't hesitate to contact support for clarification and assistance. By following these recommendations, you can significantly reduce the risk of blocking.

Answers to questions were provided by Vyacheslav Andryushkin, Deputy Chairman of the Board of SDM-Bank.

Answers to questions were provided by Vyacheslav Andryushkin, Deputy Chairman of the Board of SDM Bank.

The Mechanism of Federal Law No. 115-FZ and Bank Control over Financial Transactions

Financial institutions thoroughly examine all their operations to identify potentially questionable payments and transactions that require mandatory monitoring. Let's delve into this topic in more detail.

The operations listed in Article 6 of Federal Law No. 115-FZ are subject to mandatory control. Such transactions include, in particular:

• transactions to deposit or withdraw cash from a legal entity's current account;
• real estate transactions valued at least 5 million rubles;
• Transferring or receiving funds from partners in countries that do not comply with FATF standards.

Banks send information about such transactions to Rosfinmonitoring. This service conducts checks independently. However, clients remain in the dark - financial institutions do not inform them about the transfer of data, and Rosfinmonitoring does not publish reports on the results of its checks.

If Rosfinmonitoring discovers elements in a transaction that indicate possible violations, it has the right to ask the bank to provide additional documents to clarify the situation and initiate an investigation.

Each bank has its own criteria for determining transactions that may arouse suspicion. These internal standard assessments remain confidential and are not published in public sources.

Here are some examples. Banks may look into an individual entrepreneur's account where neither income nor expenses have been recorded for a long time, and then a significant sum is unexpectedly deposited. Large cryptocurrency transactions, transfers to counterparties deemed questionable by the bank, and the practice of "splitting" payments may also raise suspicions.

Banks have the ability to review most of their clients' transactions that raise suspicions, including transactions of up to 1 million rubles.

The bank independently makes decisions regarding actions with suspicious transactions. The user has several options:

• report the transaction information to Rosfinmonitoring, even if it is not subject to mandatory control;
• stop the transaction to verify its security and the absence of risks;
• refuse to complete the transaction;
• stop remote access to the account.

Restricting access to the account is a last resort. Financial institutions strive to attract customers and try to make their experience with services as convenient and accessible as possible. This is why access to funds is blocked only when there are compelling reasons—such measures are used significantly less frequently than, for example, transaction checks.

Let's take a closer look at the process this check goes through.

Methods for checking transactions and clients in the banking sector

In most cases, the bank follows a certain procedure: first, it identifies a suspicious transaction, then suspends its execution and informs the client about it. After this, an investigation is conducted, based on the results of which a final decision is made.

Identification of suspicious transactions is mainly carried out using automated systems in most commercial banks. During the first stage of analysis, a computer program is used that checks all financial transactions for compliance with certain criteria established by the institution. If anything suspicious is detected, the program suspends the execution of this transaction and transfers it for further study by a bank specialist for a more in-depth analysis.

Message to the client. The bank informs the client that the transaction has been temporarily suspended until the necessary additional clarifications are received. This usually happens through a push notification in the bank's app.

Banks are trying to avoid using phone calls and SMS messages, as fraud has become more frequent and customers have lost trust in such methods of communication.

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During the investigation, the bank may require confirmation of the legitimacy of the transaction and ensure that it is initiated by the account holder. Depending on the specific circumstances, the financial institution may request documents such as a contract with a partner, an asset sale agreement, invoices, or correspondence with the recipient of funds.

The client has the option of sending evidence via chat in the banking application or manually providing it at the nearest bank office.

The bank can send a request not only for current transactions, but also for previous ones. This may occur in cases where the client, for example, began regularly transferring funds from the company account outside the country, withdrawing cash, or exceeding the limits set by the bank.

Bank's decision. If the client has submitted all the necessary documents and confirmed the legality and validity of their transaction, the bank will execute it. The time required for this may vary from several hours to several days after suspension, depending on the speed of the client's response.

During the verification period, the bank may impose restrictions on various transactions. For example, it may be necessary for the company director to personally visit the branch to conduct transactions on the account, including settlements with partners. Alternatively, access to the account will be limited only to the most important transactions, such as paying salaries to employees, paying office rent, taxes, and other mandatory expenses.

What to do if an account is blocked

If the client does not provide a response to a request regarding the nature of the transaction for a long time or if the transaction raises suspicions of illegality, the financial institution has the right to restrict remote access to the account and terminate cooperation with the client.

To unblock remote access to your account, you must contact the bank and provide confirmation of the legitimacy of your transfers and payments. The most effective option would be a personal visit to the office, where you can present, for example, the relevant contracts. This is usually sufficient for conducting a check, after which the bank will make a decision.

How to avoid the risk of blocking a bank account

There are several simple recommendations that can help minimize the likelihood of an account audit or restriction of remote access to it.

Follow the correct procedure for performing regular transactions with current accounts of individual entrepreneurs or legal entities. It is extremely important to make timely salary payments, settle accounts with contractors under concluded contracts, and pay rent. If a client prefers to withdraw cash instead of making payments on invoices through the bank, this may cause dissatisfaction and suspicion on the part of the financial institution.

Don't forget to indicate the purpose of transfers for individuals. For example, you can indicate "on credit" or "birthday gift". If you plan to lend someone a significant amount, it is also recommended to draw up a loan agreement and have it notarized.

Be sure to conduct due diligence on the counterparties you interact with. For this purpose, you can use, for example, the "Know Your Client" platform from the Central Bank of Russia, as well as the websites of the Federal Bailiff Service or the Federal Tax Service.

It is possible that, although a company's activities comply with the law, it may be partnering with an unreliable partner. In such cases, the bank has the right to initiate an account audit to ensure that the company is not involved in any illegal activities within its chain of operations.

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Counterparties are organizations or individual entrepreneurs with whom your company interacts in the process Conducting business. Counterparty verification is a necessary procedure, as it helps minimize the risks associated with potential financial fraud, default, or other issues that may arise during cooperation.

One of the main reasons why it is not recommended to make payments to counterparties over 100,000 rubles is the need to comply with laws and tax regulations. Such amounts may attract increased scrutiny from regulatory authorities. This is also due to the fact that large transactions require more thorough verification and justification to avoid potential financial losses and legal consequences.

It is recommended to promptly respond to bank inquiries. If you make an error in the documents, for example, indicate an incorrect account number, do not worry – this can be quickly corrected if you contact a bank representative promptly.

The Central Bank of the Russian Federation has developed a series of guidelines for both individual entrepreneurs and organizations. These guidelines provide comprehensive information on steps to minimize the likelihood of increased scrutiny from banking institutions.

Key aspects of account blocking under Federal Law No. 115 in four main points

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