Russia has stepped up its efforts to prevent capital flight estimated at $1 billion a month and individuals hiding currency abroad may be punished with long jail terms, senior Central Bank officials said Wednesday.


Vyacheslav Kanunin, deputy head of the bank's currency control department, told a news conference Russia's ability to service foreign debts of over $80 billion was being seriously affected by capital flight.


"Talks with the Paris and London Clubs on rescheduling our debts are because Russia cannot pay them and sometimes does not even pay interest. We cannot afford to have $1 billion leaving the country every month," he said.


He said a new federal law, in effect from July 1, added two articles to the criminal code, including provisions about illegal currency deals and hidden assets.


"We understand that capital flight is caused by economic reasons and must be fought by economic means. But administrative and criminal responsibility for infringers is also needed at the present stage," he said.


Hiding sums up to $50,000 abroad brings the risk of up to three years in jail, rising to eight years if the sum exceeds $250,000. Illegal currency transactions can be punished by up to 10 years in prison.


An old article punishing "speculators" and providing for fines for enterprises hiding currency revenues abroad has been withdrawn from the code.


"We used to fine such enterprises, pushing them to the edge of bankruptcy. Now people personally responsible for capital flight will be punished," said Yevgeny Ivanov, head of department of currency control for current transactions.


"Who will feel better if a firm goes bankrupt, while its director lives happily abroad with all the money he had in foreign accounts?" he asked.


The officials said Russia must set up a serious body to combat white-collar crime, including money laundering.


"In many countries there are federal bodies, which do not necessarily report to tax authorities, where bankers can call if they see money laundering going on," said Ivanov.