AZE.US
New limits on card-to-card transfers in Azerbaijan will not solve the problem of the shadow economy and may instead push more people back toward cash payments, banking expert and lawyer Akram Hasanov said.
As AZE.US reports, Hasanov made the remarks in a Facebook post commenting on restrictions introduced on August 1.
Under the new rules, a cardholder may make up to five transfers and receive up to five payments per day. The total monthly amount of card-to-card transfers is capped at 20,000 manats.
The restrictions have been presented as a measure aimed at increasing financial transparency, reducing fraud, combating tax evasion and preventing the use of bank cards for illegal gambling.
Hasanov said he believed the stated objectives were sincere, but argued that the chosen method was crude and ineffective.
According to him, developed countries rely primarily on digital monitoring and annual income declarations rather than blanket limits on private transfers. When a person’s bank inflows do not match declared income, tax authorities can investigate the discrepancy.
Hasanov noted that Azerbaijan adopted legislation requiring income declarations for officials as early as 2005, but the system has still not been fully implemented.
He argued that the lack of transparency over income, including that of public officials, makes it difficult to establish an effective system for tracking the origin of funds.
The expert also questioned the legal basis of the restrictions, saying limits that directly affect citizens should be established by law rather than through an agreement between the Central Bank and commercial banks.
Hasanov acknowledged that the 20,000-manat monthly ceiling would not affect most citizens. It could, however, create difficulties for small business owners who receive payments through personal bank cards.
At the same time, he warned that those trying to avoid taxes could easily bypass the restrictions by using the cards of relatives or friends, or simply by accepting cash.
“The state itself is encouraging people to return to cash payments,” Hasanov said. “Previously, cashless transactions were at least visible. Now, payments above the limit may simply move into cash, where the state will no longer see them.”
He also said the restrictions could interfere with legitimate transactions. As an example, Hasanov asked why a person should be unable to repay a lawful debt of 25,000 manats through a card-to-card transfer merely because of the monthly ceiling.
In his view, the authorities should focus on verifying the source and purpose of funds rather than blocking transactions.
Hasanov concluded that the new limits are unlikely to reduce the shadow economy and may instead increase the volume of cash circulating outside the formal banking system.
AZE.US