Construction business and wholesale and retail trade - leaders of grey market

Construction business and wholesale and retail trade - leaders of grey market

In the first half of 2018, volumes of cash withdrawal of money resources have almost halved having fallen to 100 billion rubles ($1.4 billion).

The leaders of a grey market are construction business (30%) and wholesale and retail trade (33%). Sizeable proportion goes to service industry: services - 21% of the market, and logistics services - 6%. This has been concluded by the Central Bank of Russia following the research results, reports RBC. As realized by the Central Bank, shadow finance services are operations that are eventually aimed to cash withdrawal or siphoning abroad on spurious grounds for purposes of non-taxpaying, legalization of criminal proceeds, and corruption. 

Financial experts believe that a construction business has always been a subject to financial fraud. Quantities of work are overvalued, cheaper construction materials are used, unqualified labour force is involved. With that, it is difficult to review the expenses and expose divergences in accounting. Moreover, construction business has always been the major consumer of cash resources. 

The services’ sector is bound up with conversion into cash, because the services rendered are non-financial. It is impossible to keep track of whether advice had been rendered, or how much a design of whatever had cost.  

The Central Bank notes that earlier, it was almost impossible to assess how shares of consumers of shadow finance services were distributed between the finite operations (of cash-out or siphoning off) and their real beneficial owners - because of a long chain of passthrough payments (5 or 7 levels). Now, as a result of measures related to filtration of the financial market from dishonest participants, the number of levels shortened, and now there’s from 1 to 3 levels. The Central Bank emphasized that the achievement of this historic minimum allowed to produce the aforementioned evaluations. 

According to the Central Bank, over the last 4 years, the volumes of dubious operations in the Russian financial sector have gradually descended. In 2015, the regulator assessed the cash-out market to 600 billion rubles ($8.9 billion), in 2017, it’s 326 billion. The Central Bank notes that in the first half of 2018, volumes of cash withdrawal of money resources have almost halved having fallen to 100 billion rubles ($1.4 billion). The volumes of money siphoning have also dropped 5 times since 2015 - with 96 billion rubles in 2017. In the first half of 2018, there were only 35 billion rubles illegally siphoned abroad. 

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