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Russian Tax Authority Mishandles Payment Terminal Registration

Friday, February 19, 2010

Automatic payment terminals in Russia could be brought to a halt in April, since the Russian Federal Tax Service (FTS) is reaching crisis point in the registration process, which by law is supposed to be completed by April 1, 2010.

The FTS claims in a statement on its website that the number of requests for registration is currently minimal. Experts estimate that there are more than 300,000 terminals requiring registration in Russia.

In the same statement, the FTS threatens that all unregistered terminals after April 1, 2010, will be prohibited and it will audit compliance, the responsibility for failure to comply being that of the operator in accordance with Article 14.5 of the Administrative Code. The FTS listed data required for registration in its February 16 statement, but the list did not include lease contracts or electronic keys.

A different report comes from Vedomosti, who claimed that registrations were being refused unless the applicants provided sensitive information that could open up the systems to fraudulent abuse.

The FTS has demanded information on lease contracts for the premises where they are located and electronic keys which provide information about transactions made, telephone numbers and other details of individuals using the terminals.

Boris Kim, Chairman of the Committee on Payment Systems of the National Association of E-commerce, told Vedomosti that there is no legal requirement for this information. Kim said the FTS was using intra-departmental instructions, and that their actions contradicted both the law and the instructions of the Finance Ministry.

The General Director of OSMP (Joint System of Instant Payments), Vladimir Lopatin, said the release of electronic keys to the authorities could lead to all kinds of of problems; “Firstly, terminal operators would incur additional expenses and secondly, there is a huge risk of hacker interference, fraudulent money transfers and loss of confidentiality. If this issue with the FTS is not resolved, from April 1, OSMP and other payment systems will have to cease taking payments.”

Vladislav Reznik, head of the Financial Markets committee in the State Duma, was reportedly informed by the Ministry of Finance that there was no obligation to provide the FTS with such information that would allow complete access to the terminals.