Potential Cash-Based Real Estate Transactions in Russia Could be Banned
Ready for a real estate revolution in Russia?
Cash transactions in the Russian real estate market might soon become a thing of the past, if a proposed law comes to fruition. RIA Realty shares that this potential change could be introduced by the end of 2025, as suggested by Svetlana Razvorotneva.
Previously, the need for only non-cash payments in real estate transactions exceeding 1 million rubles has been debated within the industry. Industry professionals have long advocated for increased transparency and minimized fraud risks in the real estate market, and the Russian Union of Real Estate Market Participants supported this proposal.
In the past, crime related to property deprivation has been on the rise. According to the explanatory note to the bill, incidents increased from 6,000 in 2022 to 8,000 in 2023, with citizen losses rising from 32 to 42 billion rubles.
Razvorotneva hinted at the bill's potential release, and hopes it would be passed by the end of the year. To ensure a smooth transition, the suggested implementation timeline is around June-July of 2025.
On the side, it's worth noting that currently, a staggering 10-15% of transactions between individuals in Russia are carried out in cash. This makes the proposed ban a significant step toward cashless transactions, a norm already prevalent in countries like the US, Canada, Europe, China, and South Korea.
As cash transactions can serve as a means for hiding illicit activities such as money laundering and tax evasion, one can expect this ban to increase market transparency and reduce fraudulent activities within the real estate sector. However, prior to the bill's passing, practical implementation concerns will need to be addressed, along with potential economic impacts and this shift's incentive for adopting alternative payment methods.
- I'm not sure if the proposed law will effectively minimise fraud risks in the real estate industry, as practical implementation concerns and potential economic impacts need to be addressed before its passing.
- The proposed ban on cash transactions in real estate market could potentially help in prohibiting money laundering and tax evasion activities, thus increasing market transparency and reducing fraudulent activities.
- Svetlana Razvorotneva expressed hopes that the law, if passed, would be implemented by around June-July of 2025, which would mark a significant rise in financial transparency within the Russian real-estate market.
- The estimated amount of citizen losses due to crime related to property deprivation increased from 32 to 42 billion rubles from 2022 to 2023, making the need for increased transparency and prohibition of cash transactions more imperative in the real-estate sector.
- With the potential law that aims to prohibit cash transactions in real estate market coming into effect, the Russian real-estate industry is on the brink of a revolution by encouraging investing in alternative payment methods and contributing to a cashless finance-oriented future.
