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. Last Updated: 07/27/2016

Gref: Border Fraud Costs $5Bln Yearly

Russia loses $5 billion in customs payments every year due to false declarations and loose controls at the border, a government minister said Thursday.

"We could add an extra $5 billion per year to the budget if we created a proper customs administration," Economic Development and Trade Minister German Gref said at a Cabinet meeting during a discussion on the development of the customs system through 2010.

Russia adopted a new Customs Code two years ago that promised to facilitate cross-border trade and considerably simplify customs clearing procedures, but old problems, including forgery of customs declarations and poor control at border checkpoints, persist.

Furthermore, low salaries paid to customs officials abet the criminalization of the process. "What can you expect of someone who earns 4,000 rubles [$138.40] to 5,000 rubles a month while clearing hundreds of millions of dollars worth of goods each day?" Gref said.

No single customs point in Russia has scanners that can identify the goods going across the border, Gref said. As a result, customs officials are almost always unaware of whether the goods being cleared correspond to those indicated on the declaration unless they check every container by hand. "We have so many brooms and construction material imported that it could meet the demand of the entire globe," he said, talking about false customs declarations. Gref said that at least 8.5 billion rubles ($294.1 million) would be needed to install surveillance equipment at 51 of Russia's 413 border checkpoints, estimating that the total investment needed to improve customs infrastructure over the next three years would reach $500 million.