Russian bill for simplified identification of Forex brokers’ clients gets withdrawn

Maria Nikolova

Neither the central bank, nor the government backed the initiative to provide Russian Forex dealers with a simpler way of client identification.

A legislative proposal that would have seen Russian Forex brokers (or Forex dealers, as their official designation says) benefit from a simplified client identification procedure has faced insurmountable opposition in the Russian Duma.

Research by FinanceFeeds shows that the bill has been withdrawn earlier this month by the authors of the legislative piece. This happens after the Government and the Central Bank objected to the bill. The Central Bank said that the proposal was premature, whereas the Government’s objections center around AML requirements.

Let’s recall that, according to the authors of the document, as of May 15, 2018, the number of clients of the licensed Forex brokers in Russia was 3,539. At the same time, there were about 200 unlicensed companies that offer Forex services to Russian clients. These companies usually operate offshore. The total number of Russian clients trading through platforms of brokers that do not have licenses issued by the Bank of Russia stood at around 500,000.

In the face of the existing law for the Forex industry in Russia, the majority of Forex investors remain outside of the Russian jurisdiction.

When the bill was filed, the authors noted that one of the reasons for the difference in the client numbers of Russian and offshore brokers is that the current Russian laws lack a provision permitting simpler client identification at Forex dealers. An account at an offshore Forex broker, however, may be opened online, without a visit to the company’s office.

The bill envisaged changes to Russia’s anti-money laundering law. It proposed a simpler procedure for client identification when signing a contract with a Forex dealer. The new rules would have applied to companies that have Forex dealer licenses issued by the Bank of Russia.

In August this year, Russia’s Association of Forex dealers said the number of clients of Russian Forex dealers is set to increase 4-5 times if the proposed legislation for introducing a simplified client identification procedure is approved by Russian lawmakers.

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