Losses from financial schemes in Russia drop to a third in 2016

Losses from financial schemes in Russia drop to a third in 2016

- in All News, Regulation
Central Bank of Russia CBR

The losses of Russian investors to financial schemes dropped to RUB 2 billion in 2016 from some RUB 5.5 billion in 2015, Russian newspaper Izvestia reported, citing an official from the Central Bank of Russia (CBR). This represents a drop of more than 60% for a single year.

According to the media, the significant drop is mainly due to the preventive measures taken by the central bank in cooperation with the country’s interior ministry and the relevant law enforcement agencies. In 2016, the regulators revealed nearly 180 financial pyramids. A year earlier the number was 200.

The main issue concerning investors and their involvement in financial schemes has to do with their low financial literacy. Elder citizens are often more vulnerable to financial frauds, but they are not the only ones to become victims of such schemes. Fraudsters are changing and improving their schemes, which keeps them longer in the game.

In the first half of 2016, the CBR made law amendments, under which organizers of financial pyramids can be sentenced to up to six years in prison and can be ordered to pay hefty penalties in cases when the collected amount from deceived investors exceeds RUB 1.5 million. According to the CBR official, the introduction of such a law has made financial pyramid organizers think twice before engaging in unlawful activities.

The CBR is Russia’s financial mega-regulator which oversees the banking and all other financial markets in the country. It has been very active recently. It introduced a new regulatory framework for locally-based forex brokers as of 1 January, 2016. The bank recently announce the regulation of binary options is to be decided on by the end of 2017. In addition, the central bank also announced it has undertaken steps to regulate the crowdfunding market, too.

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