Bitcoin Conversion into Rubles is Money Laundering in Russia

Key Insights

• Rosfinmonitoring comments on the Supreme Court decision recognizing bitcoin-to-rubles conversion as money laundering.
• Transactions with property obtained illegally are a prerequisite for recognizing bitcoin transactions as criminal proceeds.
• Recognition of bitcoin as property instrument offers legal protection to crypto users, but control over cryptocurrency transactions is expected to increase.

In a significant development, Rosfinmonitoring, the Russian financial intelligence agency, commented on the recent decision by the Supreme Court to recognize the conversion of bitcoins into rubles as an act of money laundering.

This decision has far-reaching implications for cryptocurrency transactions in the country.

Is Bitcoin Conversion into Rubles Truly Money Laundering?

The Supreme Court’s ruling overturned a previous verdict that had acquitted a defendant in a drug trafficking case involving the conversion of bitcoins. The court of first instance had concluded that financial transactions with converted funds from bitcoins, without their introduction into economic circulation, did not constitute money laundering. However, the prosecutor’s office appealed this decision, emphasizing that the defendant had intentionally transferred money from a virtual account to bank cards, thereby integrating 8.2 million rubles into legal circulation.

The Supreme Court disagreed with the notion that converting cryptocurrencies into rubles and dispersing them across different bank cards and accounts did not constitute money laundering. It stressed that the presence of a criminal offense under Article 174.1 of the Criminal Code (laundering money obtained through criminal means) does not require the involvement of the legalized funds in economic circulation. According to the court, liability under this article arises solely from the establishment of financial transactions aimed at giving a legal form to the possession of funds.

Rosfinmonitoring, in response to the Supreme Court’s decision, stated that the precondition for criminal liability in money laundering cases is the engagement in financial or other transactions involving property obtained through criminal means. The agency explained that any financial transactions related to the legalization of criminal income encompass a wide range of activities, including cash and non-cash payments, cash transactions, fund transfers, currency exchanges, and more.

What Does It Mean for Cryptocurrency Users in Russia?

Legal experts welcomed the Supreme Court’s recognition of cryptocurrency as property, highlighting its positive impact on the legal protection of all crypto users.

Previously, the lack of legislative recognition of cryptocurrency as property in Russia had led to misunderstandings and inconsistencies in the legal treatment of cryptocurrencies. The acknowledgment of bitcoin as a full-fledged property instrument ensures that courts can no longer disregard its status as property.

It is important to note that not all cryptocurrency transactions automatically give rise to criminal liability. The crucial factor lies in the source and origin of the cryptocurrency in question. Tax evasion using cryptocurrency can also be considered a crime under Article 174.1 of the Criminal Code of the Russian Federation, further highlighting the need for increased scrutiny and control over cryptocurrency transactions.

Crypto Regulation in Russia: Progress, Challenges, and Future Outlook

While Russia has been contemplating the regulation of cryptocurrency mining and the declaration of income from cryptocurrency activities, progress on the associated legislation has been slow.

The Central Bank has been a staunch opponent of cryptocurrency legalization in the country, expressing reservations about its circulation.

The future of crypto regulation in Russia remains uncertain, but the recent Supreme Court decision reinforces the need for clearer guidelines and legal frameworks to govern cryptocurrency transactions in the country.

In conclusion, the recognition of bitcoin conversion into rubles as money laundering by the Supreme Court is a significant development in the legal landscape of cryptocurrencies in Russia.

It underscores the importance of establishing the origin of cryptocurrency funds and emphasizes the property status of cryptocurrencies.

As the legal framework evolves, ensuring compliance with anti-money laundering regulations and tax obligations will become increasingly crucial for cryptocurrency users and businesses operating in Russia.

Is the Supreme Court’s ruling on bitcoin conversion a game-changer for Russia money laundering laws? Let us know in the comments.