Russian Forex brokers may benefit from simplified procedure for client identification

Maria Nikolova

The changes are outlined in a bill aiming to fight against the illegal offering of Forex services to Russian investors.

Russian Forex brokers (also known as Forex dealers, as per their official designation) may be able to make use of a simplified procedure for client identification. This proposal is outlined in a new bill submitted earlier this week at the Russian Duma – the lower chamber of the Russian parliament.

The authors of the document explain that, as of May 15, 2018, the number of clients of the licensed Forex brokers in Russia is 3,539. At the same time, there are 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 is around 500,000. The average deposit per client is RUB 50-60,000.

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

One of the reasons for that is that the current Russian laws lack a provision permitting simpler client identification at Forex dealers, the authors of the bill state. An account at an offshore Forex broker, however, may be opened online, without a visit to the company’s office.

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

Vladimir Putin signed Russia’s Forex law in late 2014, with the hopes pinned on the sector getting rid of scams and attracting more clients thanks to its enhanced reputation and increased confidence in the brokers. More than three years after Russia’s President Vladimir Putin signed the Forex law, it appears that the Forex industry in the country has stalled – at least in respect of the number of licensed entities offering their services to Russian residents.

Those who have been monitoring the situation in Russia are well aware that there are only 8 companies with Forex dealer licenses in Russia, including local giants like Alpari.

The activity of the Russian “megaregulator” with regard to Forex licensing in 2017 can be summarized as follows:

  • 2 license applications granted;
  • 2 license applications rejected (no names mentioned);
  • 1 Forex dealer license modified.

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