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Confidential Bank Information Inaccessible To Police


The police soon may not have the authority to independently demand information from banks on their operations or on companies’ accounts during tax inspections.

A bill has been introduced to the State Duma which would allow the police to obtain such information only when performing joint inspections with tax authorities.

The new law would allow banks to avoid prosecution for wrongfully disclosing confidential bank information.

However, when such tax crimes are committed, they are often uncovered by criminal investigation units thanks to information provided by banks. If the specified amendments are passed, it will be more difficult for the police to order an inspection of a business and they will have to act together with the tax authorities and in accordance with their own inspection rules.

In terms of corruption, this would mean that bribes would have to be paid to both the Federal Tax Service (FTS) and the police to avoid inspection and prosecution. This may make the bribe prohibitively expensive, or could increase the amount of bribes if not prohibitively expensive.

Colonel Konstantin Zakharov, a spokesman for the Ministry of Interior’s Office of Tax Crimes in Moscow, explains that the main method of committing tax violations, crimes involving laundering of criminal earnings, and unlawful diversion of funds or embezzlement is by putting them under the guise of reciprocal payments with shell companies. This also includes information illegally obtained from banks by criminal outsiders.

In principle, the concept of joint inspections is non-existent; previously, inspections have only been carried out by the tax authorities with the participation of the Department of Internal Affairs on Tax Crimes (at the request of the tax authorities). Since January 1, 2009, the only effective mechanism that the police’s investigative unit had at its disposal was receiving information from commercial banks on such firms’ financial activities. It could also have been possible to determine other parties who were using the banks’ services (more precisely, those banks where they have open accounts) for the same purposes.

The bill is planned to not only limit the police’s rights to access classified bank information but also stipulate that banks should carry the highest responsibility for having maintained these criminal firms’ accounts. If they are caught, these shell companies will have to pay back everything in full (whatever was deducted from their account as debit.)

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