Russia Passes Law Allowing State to Seize Illegal Funds and Digital Assets From Officials

Russia’s State Duma, the lower house of parliament, has passed a law allowing law enforcement authorities to seek the confiscation of funds obtained illegally from government officials, including cryptocurrency. The state can try to seize the assets through a court if they exceed the income of officials.

New Law Allows Russia to Prosecute Officials With Illegal Crypto Assets

Government officials who own financial assets — including digital coins — that exceed their reported income over the past three years risk losing them to the state, according to a law passed by Russia’s State Duma this week. It allows law enforcement to request their seizure through the judiciary.

Current legislation allows Russia to confiscate real estate, vehicles, securities and equity interests if the officials who own them do not prove that they have legally received the funds spent on their acquisition. This applies to civil servants who are required to prove that their expenses correspond to their income.

The newly approved law extends the practice to funds transferred to such persons’ accounts in banks and other intermediaries, RIA Novosti reported. Prosecutors will be able to require verification of the sources of funds not only from traditional financial institutions and payment providers, but also from entities issuing or processing digital financial assets.

“Since a new instrument has appeared, therefore, it must be declared, and the income from it must also be indicated,” the head of the parliamentary committee on financial markets Anatoly Aksakov explained earlier, referring to cryptocurrency assets. .

Respective amendments have been introduced in the Russian laws “On Banks and Banking Activities” and “On Combating Corruption”. The new provisions are expected to come into force 10 days after the law is officially published, the report notes.

The legislative changes come after in August last year, President Vladimir Putin ordered the federal government to vet officials with crypto holdings. He instructed several government departments and the central bank to prepare to verify government employees’ digital asset information provided with their mandatory tax returns.

The move was announced as part of a new government anti-corruption plan for which Putin signed a special deal decree. The latest legal changes have been made as authorities in Moscow strive to comprehensively regulate cryptocurrencies, closing loopholes left after the law “On Digital Financial Assets” came into force in January 2021.

In 2020, the Russian President signed an order requiring government employees and candidates for public office to declare crypto assets in their possession. Russian officials were required to submit detailed accounts showing where they purchased the coins and their value by June 30, 2021. The obligation also applies to their family members.

Do you expect Russia to pressure officials holding cryptocurrencies to reveal and prove the origin of their digital funds? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy Eastern European journalist who loves Hitchens’ quote: “Being a writer is who I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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