Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

IT Firms Cash In on New Laws

New legislation to combat money laundering may prove a windfall for computer programmers.

The new law requires banks to install automated finance-tracking system software to keep an eye on transactions.

Software producers' revenue will climb 10 percent as a result of the law, said Leonid Viktorov, chairman of the board at FORS, a company that develops tracking-system software. According to the Diasoft software company, the market was worth $35 million to $40 million last year, meaning the industry should grow $3.5 million to $4 million this year, thanks to the new law.

Programmers also will benefit from a new tax-accounting procedure that will require banks to upgrade their enterprise resource planning, or ERP, software.

The new anti-money-laundering law, which took effect Feb. 1, requires banks and other financial organizations to provide the Financial Monitoring Commission, or KFM, with information on all suspicious transactions of 600,000 rubles ($19,500) or more. The law was enacted in hope of removing Russia from the Financial Action Task Force's blacklist of countries with lax laws on money laundering.

Both R-Style Softlab and ProgramBank -- which together control about 40 percent of the tracking-software market -- were quick to take advantage of the law, sending out advertisements offering their financial-tracking software. Other high-tech companies are looking to get in on the action.

Upgrading financial-tracking systems in accordance with the government demands won't be easy: The system must be able to monitor suspicious transactions and write up reports for the KFM. Furthermore, new employees must be hired to monitor the new system.

However, small- and medium-sized banks are going to be the ones paying big bucks to upgrade their systems.

Some tracking-system software developers have policies that favor clients who purchase services along with the software.

"These are mainly large banks," said Konstantin Markelov, deputy director of the SPLAN consulting company.

Some companies offer software that goes above and beyond the legislation.

R-Style has developed software with a directory of nations suspected of producing illegal narcotics and nations where divulging information in the process of making a financial transaction is illegal.

That software is only being supplied to clients that have used services in addition to the tracking-system software, said R-Style spokesman Mikhail Loskutov. Other clients will have to buy a whole new version of the software, he said.

The new tax-accounting legislation could benefit programmers even more than the anti-money-laundering law, SPLAN's Markelov said. Developers of ERP systems are to get a piece of that pie as well.

The ERP market is not small, either. The industry's sales, including licensing and operational management services, were worth $50 million in Russia, according to the IDC company.

Navision is working on adding new tax accounting procedures to its ERP software, said Vladislav Martynov, the company's general director.

Navision hopes the new tax legislation will stimulate clients to buy the newest versions of its software, Martynov said, adding that a large part of the profits will likely find their way to those who install ERP systems.

Columbus IT, one of Navision's partners, is working on installing the new software, Columbus president Vladimir Demin said. Consulting services volume should grow 10 percent, he said.