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Russia Kills Off 1990s Icon -- The Currency Exchange Booth

  • Kevin O'Flynn

A man enters a currency exchange office in Moscow on October 1.

A man enters a currency exchange office in Moscow on October 1.

MOSCOW -- Russia has implemented a ban on small currency-exchange booths, which have been ubiquitous in the country for nearly two decades.

The Central Bank announced the measure in April, saying that as of October 1, the exchange kiosks, often grimy hole-in-the-wall kiosks on the street, were required to become full-fledged bank branches or close altogether.

Officials say the new regulation is necessary to reduce on crime and fraudulent financial transactions.

"Unfortunately, a majority of the exchanges were illegal entities," financial ombudsman and State Duma Deputy Pavel Medvedev tells RFE/RL's Russian Service. "Theoretically they were supposed to work on behalf of banks, but in reality they worked for some kind of not-very-respectable people who often did not pay taxes. They conned people who came to change money and even developed a series of ways, very effective ones for conning [people]. They money-laundered."

In order to continue operating, the exchange booths must now offer additional banking services.

Dwindling Away

Currency exchanges first appeared after the collapse of the Soviet Union, when citizens were allowed to trade currency and there was little or no control over who opened up an exchange. They were typically nothing more than a cashier sitting behind a window in a wall or in a metal booth.

A currency exchange office on Tverskaya Street on October 1.
In their heyday in the late 1990s, following the collapse of the ruble in 1998, there were 11,500 money exchanges in Russia, officials say. Over the past decade the exchanges began to close at a rate of 1,200 to 1,500 a year as people began to rely more on official banks and cash machines to get foreign currency.

Aleksandr Khandruev, vice president of the Association of Regional Banks, says that by the beginning of this year there were only 700 exchange booths left in Russia, plus another 24,000 bank branches that provide exchange services.

Money exchanges have long had a reputation for conning people, including by advertising low exchange rates on the street only for the customer to find out that the rate is different inside.

"They con you there using different methods, including using a magnet so you only get part of the money," says Yuri Maksimov, 64, a translator who has been conned more than once over the years. "They count it in front of you, you see that it is the correct amount, but when they put it in the drawer you actually get less. There should be more control."

Nevertheless, he's not happy about the closing down of exchanges.

"I think it is bad, as the rate in Russian banks is usually higher than what the small exchanges offer," Maksimov says. "That's why I think it's bad."

The Stragglers

Many Russian banks, such as state bank Sberbak, also charge commissions.

Yelena, a 64-year-old pensioner who would not give her last name, says she supports the Central Bank's move.

A commercial bank's currency exchange counter (file photo)
"There were cases when exchanges -- like the one around the corner from us at Baumanaskaya; it's in a tire-repair place -- it is not clear how they work, from a bank or just for themselves," she says. "And it's not certain what you leave with, what kind of dollars."

Other Muscovites also seemed to support the idea.

Bagovdin Umakhanov, who is 55 years old, says he never used the exchange kiosks because he never had any foreign currency. He suggests that they be turned into public toilets.

"They could use every tenth one, nine of them could be public toilets," Umakhanov says. "The rest they can leave. And what beautiful toilets they can make of them."

Despite the deadline, exchange windows are still ubiquitous on Tverskaya Ulitsa in the heart of Moscow near the Kremlin. At least 10 of them are still advertising their services on one 500-meter stretch. Five of the six windows we visit are still working well past midday on October 1, while one is closed.

Cashiers at the open exchange windows say they have added new banking services, such as money transfers, in order to remain open. Despite the new services, most retained the shabby look of a 1990s exchange -- nothing but a cramped space behind a metal door.

In a basement off Tverskaya one cashier, in a pink velveteen tracksuit, lifts up her head from a bed that she is sleeping on inside the 24-hour exchange.

No, she says when asked if they'll close down, saying that they'll expand and offer more services and stay open. She does not get up off the bed.

RFE/RL's Russian Service contributed to this report

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