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Russia Passes Law Authorising the Seizure of Illegal Funds in Digital Assets

The Russian State Duma, or lower house of parliament, has passed legislation allowing law enforcement to seek confiscation of illegally obtained funds from government officials, including cryptocurrency. If the assets exceed the officials’ income, the state may seek to seize them in court.

Russia Can Now Prosecute Officials Who Have Illegal Crypto Holdings Under New Law

According to a law passed by the Russian State Duma this week, government officials who have financial assets including digital coins that exceed their declared income over the last three years risk losing them to the state. It allows law enforcement to seek their seizure through the courts.

Russia’s current legislation allows it to seize real estate, vehicles, securities, and stakes if the civil servants who own them fail to demonstrate that they received the funds legally. This is true for officials who must demonstrate that their expenses match their income.

According to RIA Novosti, the newly approved law extends the practice to funds transferred to such persons’ accounts in banks and other intermediaries. Prosecutors will be able to demand proof of the funds’ origins not only from traditional financial institutions and payment providers, but also from entities that issue or deal with digital financial assets.

“Because a new instrument has appeared, it must be declared, and income from it must also be indicated,” Anatoly Aksakov, the head of the parliamentary Financial Market Committee, previously explained, referring to cryptocurrency assets.

Amendments to the Russian laws “On Banks and Banking Activities” and “On Combating Corruption” have been made. According to the report, the new provisions will go into effect 10 days after the law is officially published.

The legislative changes come after President Vladimir Putin directed the federal government to investigate officials with cryptocurrency holdings in August of last year. He tasked several ministries and the central bank with preparing to verify information about government employees’ digital assets provided with their mandatory income declarations.

The move was announced as part of a new anti-corruption strategy for which Putin signed a special decree. The most recent legal changes come as authorities in Moscow work to comprehensively regulate cryptocurrencies, filling the gaps left by the law “On Digital Financial Assets,” which went into effect in January 2021.

In 2020, the Russian president issued an order requiring government employees and candidates for public office to declare any crypto assets they own. By June 30, 2021, Russian officials were required to submit detailed accounts of where they purchased the coins and their value. Their family members are also subject to the obligation.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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