The adopted legal act provides for the amendments to Federal Law of 3 December 2012 No. 230-FZ “On Monitoring Consistency of Expenses of Individuals Holding Public Positions and of Other Individuals to Their Income” (Russian): from now on public officials must declare the digital currency and digital financial assets which they, their spouses and minor children possess, and disclose the information about the cost of the transaction to acquire them. Before that, the Guidance of the Ministry of Labour and Social Protection of the Russian Federation on submitting the information about income, expenses, property and property obligations and filling out the respective declaration form (Russian) stressed that it was unnecessary to indicate there any digital currencies.

In addition, the adopted legal act amends:

• Federal Law of 7 May 2013 No. 79-FZ “On Forbidding Certain Categories of Individuals to Open and Have Accounts (Deposits), Store Cash and Values in the Foreign Banks Located Outside the Territory of the Russian Federation, and Own and (or) Use Foreign Financial Instruments” (Russian). The new amendments classify the digital financial assets and digital currencies, issued within the information systems which are organized in accordance with foreign legislation, as foreign financial instruments (Russian). Consequently, certain categories of public officials are forbidden to own and use them;
• Federal Law of 7 August 2001 No. 115-FZ “On Countering the Legalization (Laundering) of Proceeds of Crime and Terrorist Financing” (Russian). The amendments provide for the establishment of a system regulating circulation of cryptocurrencies in the context of the fight against money laundering and terrorist financing.

There are few countries like Russia that oblige their civil servants to declare cryptocurrency.

For example, on 20 March 2020 Ukraine adopted Law No. 140-IX “On Amending Certain Legal Acts of Ukraine on Ensuring the Effectiveness of the Institutional Mechanism for Preventing Corruption” (Ukrainian) that compels officials to declare cryptocurrency along with other intangible assets. Declarants should disclose the information about the type and characteristics of such assets, the date on which the property entitlement arose and their value at the time of acquisition. In Belarus, Law No. 305-3 of 15 July 2015 “On the Fight against Corruption” (Russian) does not require directly to include in the income and property declarations the information about the cryptocurrency in possession of the declarant, however according to the letter of the Ministry of Taxes and Duties of the Republic of Belarus (Russian), civil servants must reflect in their declarations the information about the income derived from mining, creation, acquisition and disposal of tokens. Nigeria is reported to be planning to oblige civil servants to declare cryptocurrency along with other personal assets.

The appearance of digital currencies has had a far greater impact on the fight against the laundering of proceeds of crime. The decentralized character of cryptocurrency makes it possible to use it to transfer and store money as well as to subsequently convert it into fiat money with no external control. As a result, cryptocurrencies are often employed in illicit activities, including in the laundering of proceeds of corruption and other crimes.

Therefore, many countries are developing the legislation which defines legal status of digital currencies with a view to have the possibility to control their circulation.

*As per the definition of the FATF, cryptocurrency (virtual currency) is a digital representation of value that can be digitally traded and functions as a medium of exchange, and/or a unit of account, and/or a store of value, but does not have legal tender status.