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Corporate law and governance, financial transaction taxes

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Financial infrastructure and financial market regulation


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FFMS May Gain Access to Bank Accounts

26.01.2012 20:49 / Interfax

The Federal Financial Markets Service (FFMS) may gain access to bank accounts in order to join the International Organization of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding: memorandum of understanding.

The draft bill by the Ministry of Finance has been published on the Ministry for Economic Development website.

The bill aims at harmonizing the Russian law with international standards and IOSCO policies, which is one of the terms of FFMS ascendancy to the memorandum, says the introductory letter to the draft.

If FFMS does not ascend prior to 1 January 2013, the Russian Federation could join the list of countries that are non-compliant with key international standards, effectively blocking the formation of a financial center in Russia and crashing the country’s investment ratings.

The Ministry of Finance proposes amendments to the Banking Act that will make client data disclosure to FFMS obligatory for banks, including companies, private individuals, account transactions and client deposits. The FFMS has a right to serve banks with a disclosure order.

To protect citizens’ statutory rights to banking secrecy, the order may only be based on a directive signed by the Head of FFMS.

Further amendments are also proposed to the Securities Market Act, allowing the FFMS to turn to courts for enforcement of the disclosure orders.

Moreover, the draft law includes procedures for sharing confidential information between the Federal Financial Markets Service and foreign regulators.

Earlier, Dmitry Pankin, Head of the FFMS, talked of plans to gain access to bank accounts in 2012 in order to join the memorandum.

Dmitry Pankin pointed out that the FFMS doesn’t have rights to access bank account information, especially private individuals data. The FFMS also doesn’t have the right to share information received with foreign financial market regulators.

According to Pankin, there are objections that due to this right the FFMS can become a police service for no apparent reason. “We’re looking for a compromise now. We’re trying to define situations when the FFMS can request information”, said Dmitry Pankin, adding that the Central Bank of the Russian Federation doesn’t have any substantial objections.

The FFMS has signed a bilateral memorandum of understanding with regulators from 16 countries, but the list doesn’t include the USA and Great Britain. This can be resolved by ascending to the IOSCO multilateral memorandum.

Project Group №1Dmitry Pankin