Russian Central Bank notes 7% rise in number of 'illegals' to nearly 2,500 in financial market in H1 2023

MOSCOW. July 17 (Interfax) - The Central Bank of Russia (CBR) identified 2,449 entities, companies, projects, individual entrepreneurs, and others, in total with signs of illegal activity in January-June 2023, including signs of financial pyramids, which was a rise of 7% year-on-year, the CBR said in a statement.

There were 847 illegal creditors, an increase of 28% year-on-year; 1,139 pyramid schemes, a rise of 19% year-on-year; and 434 illegal professional participants in the securities market, a drop of 35%, in the reporting period.

The number of pyramids schemes increased by 1.7-fold quarter-on-quarter in Q2 2023, the report indicates. The main growth came from short-term pseudo-investment projects on the internet, including in social networks and instant messengers. Organizers most often received funds from clients in the form of cryptocurrencies and through foreign payment services. In some cases, potential customers have been warned in advance that a project is a pyramid scheme, the CBR notes.

Despite growth in the number of illegal creditors in the first half of 2023, the growth rate slowed compared to last year. There was an increase of nearly double in 2022 compared to 2021.

The CBR explains the reduction of about one-third in the number of illegal professional participants in the securities market in January-June 2023 versus January-June 2022 by companies with foreign registration exiting the Russian market.

The CBR sends information about all uncovered facts to law enforcement agencies and the Federal Anti-monopoly Service (FAS) in order to suppress illegal activities in the financial market.

There were around 70 cases initiated under criminal articles; more than 300 administrative cases under various articles of the Russian Code of Administrative Offenses, including more than 200 cases under the article for illegal professional activity in providing consumer loans; as well as more than 600 other responses were taken, including the results of consideration of materials sent by the regulator, including previous periods, in the first half of 2023.