Russian President Vladimir Putin has authorized a measure allowing the confiscation of “illegal” money from bank accounts in the country. The measure mainly targets Russian civil servants who made above-declared earnings.
According to a text published by the Russian news agency, RIA Novosti, the income tax criterion was established. That way, the money of Russian officials that matches their statements will not be affected.
However, any money that “exceeds the official income of the last three years” can be confiscated. The measure will also be valid for real estate, vehicles, bonds and equity interests. The confiscated funds will go to the Russian war effort against Ukraine.
Direct confiscation of the account
To establish the forfeitures, the government will use standard income tax returns over a period of three years, i.e. between 2018 and 2021. If the person is confirmed to have been “excessively enriched”, then the excess funds will be blocked. .
According to the law, the income earned must be in line with that declared in the last tax, and the two previous years. In addition, citizens must confirm the legality of funds used in acquisitions.
The same goes for money received directly into the bank account, which will need to have its source declared. Otherwise, these funds may also be confiscated.
Apparently, the law was Putin’s answer to dealing with the aftermath of sanctions and withdrawals from services from Russian territory. The country’s banks were excluded from the Swift payment system, which created a series of problems.
As a result, Russian banks are isolated from the rest of the world and cannot receive or transfer money internationally. Because of the war against Ukraine, the law may be Putin’s solution to cash in hand.
Law raises citizens’ fear
The law does not make it clear whether the confiscations will extend to persons who are not Russian state employees. This leaves one more concern for the country’s citizens, who already face problems withdrawing their money from local banks.
When Russia was excluded from Swift, citizens queued for miles to withdraw their funds, fearing that the banks would run out of cash. And that actually happened, as reported by CriptoFácil, and led to the bankruptcy of the country’s largest bank, Sberbank.
Because of sanctions and bankruptcies, Russian citizens rushed to seek refuge in BTC and other cryptocurrencies. Thus, trading volumes in Russia reached the highest levels in almost a year.