Current key aspects of Russian currency regulation

Currency resident of Russia ≠ tax resident of Russia

A currency resident of Russia is any citizen of Russia or permanent resident of Russia, regardless of how long they spend in Russia during a calendar year.

A special currency regulation regime is prescribed for “special residents” (those who spend more than 183 days in a calendar year outside Russia). They are exempt from most of the requirements and restrictions of Russian currency law that apply to ordinary residents.

The Federal Law "Concerning Currency Regulation and Currency Control" imposes a range of restrictions and requirements on accounts held by residents in foreign jurisdictions.

Reporting on foreign bank accounts and accounts with other financial market organisations:

Currency residents of Russia are obliged:

• To submit notifications of the opening/closure/change in details of foreign accounts;

Notifications must be submitted within 1 month of the opening/closure/change in details of an account or by 1 June in the case of special residents who have become "ordinary" residents by the end of a calendar year.

• To submit reports on the movement of funds and other financial assets in foreign accounts and on non-bank transfers abroad annually and in the event of the closure of an account;

Reports must be submitted: a) by 1 June of the year following the reporting year, or b) in the event of the closure of an account simultaneously with the notification of closure of the account.

The time limit for submitting a report on the movement of funds and other financial assets in foreign accounts and on non-bank transfers abroad for 2021 was extended to 1 December 2022.

• To comply with the conditions of use of foreign accounts when crediting money or other assets to them.

Special residents are partially exempt from these requirements.

• To comply with repatriation requirements;
• To comply with the requirements of edicts and decrees in the context of restrictive measures.

• For the performance of an illegal currency transaction, the payment of funds into accounts in breach of currency law and the subsequent use of such funds, a fine may be imposed equal to 20−40% of the transaction amount (until 24 July 2022 the fine was from 75% to 100% of the transaction amount).
• Late submission of foreign account notifications: 1,000 — 1,500 roubles;
• Failure to report an account: 4,000 — 5,000 roubles;
• Failure to submit a report on the movement of funds and other financial assets: 300 — 3,000 roubles (20,000 roubles for each repeat offence);
• Failure to submit a report on non-bank transfers of funds using electronic payment media incurs a fine of 20−40% of the amount of funds credited to an electronic payment medium.
• The limitation period for the imposition of administrative penalties is 2 years from the occurrence of the offence.

Currency compliance audits by tax authorities have been suspended until the end of 2022.

An exception is made for audits already in progress where offences have been found for which the limitation period for administrative penalties expires before 31 December 2022. Also excluded from the suspension are inspections relating to:

• violations of presidential and governmental acts adopted from 28 February 2022 onwards which establish special economic measures in response to sanctions;
• currency violations associated with the use of cash in currency transactions between residents and the purchase and sale of foreign currency other than through authorised banks.

Important! The Ministry of Finance has proposed the introduction of parameters for monitoring compliance with Russian counter-sanctions, which likewise impose a range of restrictions on the use of accounts held by residents with banks outside Russia as well as fines for non-compliance.

Until 1 January 2020 it was necessary to consult the list of "permitted" currency operations when crediting funds from a non-resident of Russia to a foreign account in any state.

From 1 January 2020

• Accounts not only with banks but also with "other financial market organisations" fall within the ambit of currency regulation. Such accounts must be reported to the tax authorities and annual reports must be submitted.
• Any funds from non-residents may be paid into foreign bank accounts if they are held with banks of EAEU member states or states that actually exchange financial information with Russia. When undertaking foreign currency transactions on accounts in countries that do not exchange financial information with Russia, it is necessary to consult the list of "permitted" currency operations.

From 1 January 2021

Reports on foreign accounts must cover not only funds but also other financial assets.
Toughening of the rules around loan repatriation.

From 1 July 2021

Reports on non-bank money transfers using electronic media provided by foreign providers of payment services.

Russian currency residents are required to ensure the return to Russia of both rouble and foreign currency funds provided to non-residents under loan agreements and through loans to controlled foreign companies.

• Penalties for individuals for the non-repatriation of loans amount to up to 30% of the unreturned funds. Penalties for breaches of the repatriation rules may be imposed for loans issued after 14 April 2018.
• Obligation to register issued loans with authorised banks.

IMPORTANT! Special residents are not formally exempt from the loan repatriation requirement.

The Currency Regulation Law lays down a closed list of permissible credits to residents' accounts with banks in countries that do not provide for the automatic exchange of information with Russia.

Credits to a resident’s own accounts:

• transfers from own accounts with banks in Russia or outside Russia;
• crediting of funds in the form of the minimum deposit required by the rules of the bank concerned when opening an account (deposit);
• crediting of cash deposited in an account (deposit);
• crediting of funds received as a result of conversion operations using funds previously credited to such accounts.

Permitted transactions with other residents (individuals and legal entities):

• transfer of Russian currency from a resident’s foreign account to another resident’s account in Russia and from a resident’s account in Russia to a foreign account of another resident;
• transfer of Russian currency from a resident’s foreign account to a foreign account of another resident;
• transfer by a resident in favour of other residents via their foreign accounts of foreign currency not exceeding in one business day an amount equal to the equivalent of USD 5,000 based on the official CBR exchange rate set on the date the account is debited;
• transfer by residents of foreign currency from accounts held by them with authorised banks in favour of other residents who are their spouses or close relatives via accounts held with authorised banks or banks located outside Russia;
• crediting of wages and other payments in foreign currency outside Russia under employment contracts concluded with resident legal entities;
• bequeathing of foreign currency assets, inheritance of currency assets and transfer of currency assets by an estate to beneficiaries;
• gifting of currency assets to a spouse and close relatives.

Credits from non-resident individuals and/or legal entities:

• amounts of taxes refunded by competent authorities of the state in which the resident is staying;
• amounts of interest on balances in accounts with banks outside Russia;
• salaries of employees of official missions of the Russian Federation and missions of federal executive bodies outside Russia;
• salaries and other payments related to the performance of employment obligations by residents outside Russia under employment contracts with non-residents;
• payments made in accordance with decisions of courts of foreign states, with the exception of international commercial arbitration decisions;
• insurance payments, pensions, stipends, alimony and other social payments from non-residents;
• return of erroneously transferred funds and refund of amounts paid for goods and services purchased by a resident when they are returned to a non-resident;
• income from sales of precious metals recorded in residents' accounts with foreign banks which is paid by reason of the legislative requirements of a foreign state other than through accounts with authorised banks.

The list of permitted operations does not include, inter alia, credits of dividends, income from the sale or redemption of securities, coupons, income from the sale or lease of immovable property, etc.

However, there are no restrictions on the crediting of funds to brokerage accounts.