Illegal forex dealers pose challenge to Russian central bank

MOSCOW: Russia's central bank is finding it hard to identify and take action against illegal foreign exchange dealers, who often don't use publicly accessible websites and accept payment in cryptocurrency.

Fraudsters stepped up online activities last year as the coronavirus pandemic hit the Russian economy and people turned to the stock and foreign exchange markets in search of new sources of income.

In 2020, the central bank identified 395 entities operating in Russia that showed signs of being illegal forex dealers. That was twice as many as 2019, Valery Lyakh, head of market violations monitoring at the central bank, told a briefing.

Most operate online and position themselves as foreign companies registered in Britain, Cyprus and offshore islands.

These companies have systems for selecting their target customers by location, browser type and mobile phone model. Then they set up redirects to their closed sites through social networks.

Illegal forex dealers do not even try to obtain licences from regulators as they usually don't operate for longer than three or four months.

"It is difficult to identify such schemes with the technologies that we use to monitor the Internet," Lyakh said.

Illegal forex dealers often rely on payments and settlements in cryptocurrency as most countries have no legislation regulating such transactions.

"Tracking them is extremely hard," Lyakh said.

The average amount of damage to Russians from illegal forex dealers' activities in 2020 almost doubled to 50,000-100,000 roubles ($675 to $1,350).