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. Last Updated: 07/27/2016

Central Bank Forms Net Division

In preparation for regulating banking operations on the Internet, the Central Bank has created a special division within its department for monitoring banks.

Bankers have greeted this news enthusiastically, with the hope that the new division will establish clear rules of the game and foster the growth of a new form of banking services.

Alexei Simanovsky, head of the Central Bank’s monitoring department, told the Agency of Financial Information last week that the new division should study banking services offered on the Internet and develop standards for those operations.

Vedomosti sources in the Central Bank confirmed that a decision had been made to establish a new structure, but said the process is only in the initial stages.

It is not yet clear how long the formative period will last. Given that the order was signed recently, it could be a long time before the work of the division is fully under way — as one of the employees of the Central Bank suggested, "it could take six months, depending on the administrative abilities of the management."

"So far in Russia, only a few credit organizations offer electronic services, but we are confident that the number and volume of operations will increase sufficiently quickly," Simanovsky said when asked about the creation of the new division.

Moreover, Internet operations generate additional risks — operational, technological, legal and the risk to reputations all increase the importance of corporate management and internal control within banks, he said.

However, it is not yet clear how the work of the new division will be organized. A decision has not been made on exactly which operations the division will monitor — the Internet is already subject to a number of regulations.

Nevertheless, banks have reacted positively to the formation of the new division. They expect to receive support from the Central Bank to ensure that, as Valery Nikitin, board member of Avtobank, said, "Everything remains in the bounds of the law and our work is simplified."

Andrei Vanin, director of the department of long-distance services for Guta Bank, said the regulation of the new market "should bring forth clearer rules of the game that will benefit everyone because banks will now have someone to deal with."

Nikitin called the new division "expedient." He did not foresee any difficulties in monitoring Internet banking operations because the data processing "is no different than usual" and "certain rules, confirmed by the Central Bank" already exist.

State Duma deputies also had a positive reaction to the creation of a new sphere of responsibility within the Central Bank.

Vladimir Tarachev, deputy chairman of the committee for credit organizations and financial markets, said in an interview that "it is beneficial and correct" and promised to support the initiatives of the Central Bank connected with Internet banking, electronic commerce and data processing.