Bank Clients’ Data Faces Scrutiny
By Yulia Govorun
VEDOMOSTI
Federal tax, customs and financial markets officials have set their sights on banks’ client confidentiality, which analysts said could shake confidence in the entire banking system.
Last summer the Finance Ministry proposed draft amendments to the law on foreign currency oversight, under which the Federal Tax Service would receive the ability to ask banks for transaction certificates and information about clients’ transactions.
If the changes are passed, banks would have to give tax officials not only information about clients’ accounts and their bank statements, but also customs declarations and documents that are used to conduct foreign-currency operations or confirm the exchange of goods.
In December 2009, the Federal Customs Service also decided to expand its powers. The service prepared draft amendments to the Customs Code, under which customs officials would be able to seize cash in rubles or foreign currencies for up to five days, as well as checks if the traveler refuses to declare the source of the funds.
Under the proposals, the customs service would be able to request information about the source of funds received, which is currently protected under bank secrecy.
“I really don’t get why people carry cash around with them when there are cards,” a high-ranking source at the Federal Customs Service told Vedomosti. “But I do have a possible answer. They need to pay for their personal import businesses, since it’s easier to do that with cash.”
The Federal Service for Financial Markets is also looking for access to bank secrets. Those powers are listed in the bill on counteracting the illegal use of insider information and manipulation of the market, which the State Duma passed in a first reading in April 2009.
The bill has a clause saying the Central Bank is required to grant authorities’ requests for information, “including information classified as commercial, professional or banking secrets.” The rule is meant to help uncover and prevent the use of insider information.
Under the law on banks and banking activity, access to bank secrets is available to the courts, the Audit Chamber, the tax and customs services, the Pension Fund, social insurance funds and the court marshals. But the information they can receive is limited based on their specific work.
The entire understanding of bank secrecy is being discredited, said Lidia Gorshkova, head of the banking practice at Pepeliaev Group.
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In other countries, tax and customs officials cannot access bank secrets, MDM-Bank chairman Oleg Vyugin said. If those secrets are not a secret to those agencies, then it will shake confidence in the banking system, he said.
Dmitry Rudenko, a member of the executive board at VTB 24, said the discussion should be on how information is disclosed, not on completely freeing fiscal agencies from limits on bank secrecy. “I don’t want to give information to people from the communal services department or the traffic police,” he said.
Bank secrecy needs to be preserved, though two or three agencies should have access, said Yevgeny Retyunsky, a former member of the executive board at Barclays Bank.
Task 1. Read the article.
Task 2. Find the expressions in the article that mean:
a) careful examination
b) plan
c) a small change, improvement
d) a company
e) the right to use, to enter etc.
f) special knowledge of a particular organization
g) existing before but not now
Task 3. Match 1 – 8 to a) – h) to form partnerships used in the article.
1. bank clients’ a) certificates
2. currency b) information
3. transaction c) information
4. customs d) regulation
5. to request e) secrecy
6. insider f) data
7. bank g) agencies
8. fiscal h) declaration
Task 4. Complete the table using the words from the article.
| Verb | Noun |
| … … receive … declare … seize … request disclose | amendment regulation … information … operations … proposal … … |
Task 5. Over to you. What is the key message of the article?
Task 6. Render the article.
Article IX
Branding: A crucial defence in guarding market share
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By Fiona Harvey
For companies whose main products will never be seen by consumers, whose skill may lie in producing anonymous grey powders, the issue of branding might seem irrelevant. What difference can a name – or a carefully designed logo – make to selling chemicals? ‘Nobody loves chemicals’, says Peter May, Global Executive for chemicals and pharmaceuticals at KPMG, the business services group, which could explain why so few chemicals products are branded to the end-user. Yet branding can be a key defence in protecting market share in markets where all products seem to be the same. Even in the business-to-business market, chemicals producers can fix their product’s identity in the client’s mind through clever use of branding, according to Mr May.
The procurement officers in large companies, who have responsibility for buying in supplies, can be as susceptible as end-users to branding that emphasises a product’s key attributes and the manufacturer’s values. Mr May cites the example of Neoprene, an industrial material recognized for its strength and toughness, as a success in this field.
Catrin Turner, partner at KPMG’s IP services division, agrees. She notes: ‘You can’t neglect branding. If you think you have no brand, what that means is not that you really don’t have any brands, but that you are not in control of them. And research shows that people do make buying decisions on the basis of brands.’ Dow Corning, for instance, set up the Xiameter brand for its lower-priced, high volume and established products, in the commoditised end of the chemicals market.
‘We were aiming to make a clear choice for customers, characterizing the product very clearly for the market, and for our employees,’ says Mike Lanham, Executive Director of Xiameter. ‘A lot of the chemical industry does not spend time on branding. It was a foreign concept, and we’ve had plenty of requests from other companies to talk to them about what we did and why, as it is so unique.’
Chemicals companies can also extend their brands into the consumer arena. Ms Turner points to the success of brands such as Lycra, Goretex, Microban and Teflon in the consumer market, as examples of how chemicals companies can appeal directly to customers even though their contribution may not be obvious in the end product. ‘DuPont didn’t make a success of Lycra by accident. It was a carefully executed strategy, which has paid off,’ she explains.
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Task 1. Read the article.
Task 2. True or false?
a) The end-user is a person or organization that actually uses a product, rather than someone distributing it.
b) Toughness is the noun relating to ‘tough’, which means very strong and resistant.
c) If you neglect something, you put a lot of time and effort into it.
d) If you are in control of something, you can decide what happens to it.
e) High-volume products are made in very small quantities.
f) An established product is one that is well-known.
Task 3. Match the adjectives 1 – 6 to the expressions a)– f) that they describe in the article.
1. anonymous a) defence
2. irrelevant b) Executive
3. Global c) use of branding
4. key d) grey powders
5. business-to-business e) market
6. clever f) issue of branding
Task 4. Match the adjectives 1 – 6 in Task 3 to their meanings a)– f) below.
a) unimportant
b) without identity
c) intelligent
d) between companies, rather than to consumers
e) extremely important
f) covering the whole world
Task 5. Below are one-sentence summaries of each of the paragraphs in the article. Put the summaries in the correct order.
a) People who buy chemicals for companies to use are just as influenced by brands as consumers.
b) If a chemicals company thinks it has no brands, it is mistaken.
c) Chemicals companies’ brands can be used in the consumer market.
d) Branding may not seem important for chemicals, but it is.
e) An executive of a chemicals company talks about the importance of branding.
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Task 6. Complete the statements with the correct form of expressions from the article.
a) If an idea is unknown or irrelevant to someone, it is ________ to them.
b) If you ask for something, you make a ______ for it.
c) If there is only one of something, it is _________ .
d) If you _______ a brand into another area, you start using it in that area.
e) _______ is used here as another word for ‘market’.
f) If you _______ to customers in a particular way, you communicate with them and try to persuade them to buy your products in that way.
g) A carefully ______ ______ is a series of steps that are carried out as planned.
h) If a plan ______ _______ , it succeeds.
Task 7. Over to you. What is the key message of the article?
Article X
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