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The Russian authorities are considering new powers for credit institutions in the tax sphere.
The Ministry of Finance of Russia has put forward an initiative to oblige banks to constantly monitor the location of customers when they use Internet banking. If it turns out that a person mainly uses services from abroad, the credit institution will have to request additional information about their place of residence.
The corresponding proposal of the Ministry of Finance is contained in the draft government decree, which is reported by Izvestia. The document introduces amendments to the regulation regulating the actions of banks to establish the tax residence of clients. If the requested documents are not provided, banks will have the right to suspend operations on the client's account, as well as terminate the agreement unilaterally. The project provides that credit institutions will have to constantly monitor the geolocation of the client — from which country he enters the online bank.
So far, no final decisions have been made on this initiative, the ministry assured. They added that additional discussion is needed with other departments and members of the professional community. The Federal Tax Service also noted that the draft regulatory act was designed to launch a discussion of the mechanism. Based on its results, the amendments may be finalized or recognized as inappropriate, the service stressed.
However, the implementation of the requirements of the Ministry of Finance may face difficulties: the client's location, which is determined by the smartphone, is not always reliable. Users can use proxy servers or VPNs to access resources. In addition, sometimes customers can access online banking from corporate devices, which often use Internet access via a single IP address. Such risks were pointed out by the National Council of the Financial Market (NSFM), and its conclusion was sent to the Ministry of Finance.
In addition, customers have the right to restrict access rights to location information in the mobile application on their device or disable the corresponding functionality altogether. In this case, the financial institution does not have the right to restrict the client's access to the management of their funds, the conclusion of the NSFM notes.
Currently, banks should request the status of a tax resident only when entering into a contract with a client, said Andrey Emelin, head of the National Financial Market Council. He noted that in the issue of monitoring the client's geolocation, "we are talking about continuous monitoring of the traffic source."
"If the bank detects signs that a person may be living abroad, it is necessary to additionally request documents on residence. This information must be sent to the Federal Tax Service. At the same time, it is not yet clear from the draft resolution exactly how this information will need to be provided, " he said.
"Banks usually track customers geolocation anyway, but for other purposes — to detect fraud cases (for example, if intruders have taken over the customer's online bank)," said Alexey Voilukov, Vice President of the Association of Banks of Russia (ADB). He added that if the initiative is approved, the geolocation check will be carried out for new purposes.
"It turns out that only for the sake of confirming the residency of individual and very few clients, banks will now have to significantly refine their information systems and technological algorithms for performing operations," added Andrey Emelin from the NSFM.
According to the current legislation, an individual is considered a tax resident of the Russian Federation if he actually stays in Russia for at least 183 days during the next 12 consecutive months. You can confirm this status, for example, by submitting a copy of your passport with border crossing marks, a migration card, a timesheet, and other documents. If the tax authorities fail to notify you of a change in your non-resident status, you may face an administrative fine under Article 119 of the Tax Code.
The Ministry of Finance of Russia has put forward an initiative to oblige banks to constantly monitor the location of customers when they use Internet banking. If it turns out that a person mainly uses services from abroad, the credit institution will have to request additional information about their place of residence.
The corresponding proposal of the Ministry of Finance is contained in the draft government decree, which is reported by Izvestia. The document introduces amendments to the regulation regulating the actions of banks to establish the tax residence of clients. If the requested documents are not provided, banks will have the right to suspend operations on the client's account, as well as terminate the agreement unilaterally. The project provides that credit institutions will have to constantly monitor the geolocation of the client — from which country he enters the online bank.
So far, no final decisions have been made on this initiative, the ministry assured. They added that additional discussion is needed with other departments and members of the professional community. The Federal Tax Service also noted that the draft regulatory act was designed to launch a discussion of the mechanism. Based on its results, the amendments may be finalized or recognized as inappropriate, the service stressed.
However, the implementation of the requirements of the Ministry of Finance may face difficulties: the client's location, which is determined by the smartphone, is not always reliable. Users can use proxy servers or VPNs to access resources. In addition, sometimes customers can access online banking from corporate devices, which often use Internet access via a single IP address. Such risks were pointed out by the National Council of the Financial Market (NSFM), and its conclusion was sent to the Ministry of Finance.
In addition, customers have the right to restrict access rights to location information in the mobile application on their device or disable the corresponding functionality altogether. In this case, the financial institution does not have the right to restrict the client's access to the management of their funds, the conclusion of the NSFM notes.
Currently, banks should request the status of a tax resident only when entering into a contract with a client, said Andrey Emelin, head of the National Financial Market Council. He noted that in the issue of monitoring the client's geolocation, "we are talking about continuous monitoring of the traffic source."
"If the bank detects signs that a person may be living abroad, it is necessary to additionally request documents on residence. This information must be sent to the Federal Tax Service. At the same time, it is not yet clear from the draft resolution exactly how this information will need to be provided, " he said.
"Banks usually track customers geolocation anyway, but for other purposes — to detect fraud cases (for example, if intruders have taken over the customer's online bank)," said Alexey Voilukov, Vice President of the Association of Banks of Russia (ADB). He added that if the initiative is approved, the geolocation check will be carried out for new purposes.
"It turns out that only for the sake of confirming the residency of individual and very few clients, banks will now have to significantly refine their information systems and technological algorithms for performing operations," added Andrey Emelin from the NSFM.
According to the current legislation, an individual is considered a tax resident of the Russian Federation if he actually stays in Russia for at least 183 days during the next 12 consecutive months. You can confirm this status, for example, by submitting a copy of your passport with border crossing marks, a migration card, a timesheet, and other documents. If the tax authorities fail to notify you of a change in your non-resident status, you may face an administrative fine under Article 119 of the Tax Code.
