The Russian government can be tough to love. Especially in the financial industry, where they show way more caution than other countries. It is believed that their regulations for Forex are one of the toughest in the world. So no wonder they try to disregard every new plea that comes in from the brokers.
A few days ago local brokers came together and put out a joint plea to the Russian Parliament, to soften their regulations about client verification. After the plea, the Russian Parliament did what it does best and firmly denied the request. This is one of the many blows the government has been directing towards the brokers and lately their Associaton of Forex Dealers.
This is not too new for the brokers as they are already aware of the government’s attitude towards them, it truly is no secret as the government is not trying to hide them. As a matter of fact, they are quite vocal with their dislike for Forex brokers. One of the most vocal opposers is the governor of the Bank of Russia, Elvira Nabiulina.
The Russian government’s only goal is to defeat money laundering in the country and protect its citizens. It looks like their best way was to completely shun their local Forex brokers in an effort to either drive them out of business or just simply turn their existence into hell, and looks like its working.
The complete opposite
The problem with these legislations and regulations is that many Forex brokers in Russia cannot provide quality service because of them. For example, their inhibition to offer high leverage trading is hitting them hard. Many Russian traders are forced to go for offshore companies and trade with them, which in turn makes their trading even less protected given the fact that the Russian government can’t intervene in that. So the government may be achieving the complete opposite with their tough regulations, something the brokers are trying to make them see.
Russian companies cannot identify their clients remotely, they need to meet them personally and conduct a “research-based screening”. It is understandable that these types of operation could cost a fortune and would take a lot more time than just a digital identification system, but no, rules are rules.
Fears of terrorism and money laundering
Although the central bank is trying to oppose these new legislations, there is nothing that can stand in the way of Russian authorities. They firmly believe that their actions are what prevents most of the money laundering schemes. The country has had numerous cases in the past where their citizens got scammed without even noticing.
In addition, there is also the fear of terrorism funding. The fact is that Russia has a lot of enemies, more than friends actually, therefore it cannot afford to be too relaxed. There is always an influx of people coming from the middle east and the Northern Caucasus, places where Russia finds most of its dangerous opposition, therefore it’s important to know that these people will not get funding by any means.