Since December 2, 2019, it has become easier and more convenient to deposit money into foreign currency accounts. Most importantly, such accounts must be opened in banks of the EEU member countries or countries that exchange financial information with Russia. In addition, it is no longer necessary to return foreign currency earnings back to Russia if they were credited to these accounts.
1. Crediting funds to foreign currency accounts without restrictions
On August 2, 2019, new amendments to the currency legislation were introduced1. This, among other things, made it possible to freely transfer money from non-residents to residents’ accounts in foreign banks while observing the following conditions:
- the beneficiary’s account is opened with a bank of a FATF2 or OECD member state3;
- the foreign state exchanges financial information with Russia4.
On December 2, 2019, amendments came into force. Due to these amendments, money can be freely credited to a foreign account if:
- the account is opened in a member state of the Eurasian Economic Union (hereinafter – the “EEU”);
- or the foreign country exchanges financial information with Russia5.
These amendments expand the list of countries to whose bank accounts Russian residents can freely credit funds. For example, now residents of the Russian Federation will be able to conveniently use bank accounts opened in Cyprus, Switzerland and Monaco.
However, the innovations have a negative effect. Some countries – large financial centres, such as the United States and Great Britain, do not meet these criteria, so it will be impossible to carry out a number of operations with such accounts (receive dividends on securities, etc.).
2. Exemption from repatriation
The law also provides for exemption from the obligation to repatriate in respect of accounts in EEU member countries or countries that automatically exchange financial information with the Russian Federation. Prior to its adoption, such exemption was only granted in respect of accounts in OECD or FATF member countries that simultaneously exchanged financial information with the Russian Federation.
Moreover, the President of the Russian Federation has introduced to the State Duma a bill providing for mitigation of criminal liability for the non-return of foreign exchange earnings6. Now, criminal liability for this will only occur if the offense is repeated. In the event of a one-time violation of the requirements of the currency legislation on the return of funds, the person will be subject to an administrative penalty in the form of a fine7.
The threshold for a large amount of non-repatriated funds also increases from 9 million rubles to 100 million rubles, and for an especially large amount – from 45 million rubles to 150 million rubles.
Thus, from the beginning of 2020, funds can be credited to accounts in banks of EEU member countries or countries exchanging financial information with the Russian Federation without restrictions, which will simplify the process of performing foreign exchange transactions for both individuals and legal entities.
1 See “On Liberalisation of Foreign Exchange Control in Relation to Individuals”. — https://fp.legal/ru/2019/10/05/o-liberalizatsii-valyutnogo-kontrolya-v-otnoshenii-fizicheskih-lits/
2 Financial Action Task Force on Money Laundering, FATF.
3 Organisation for Economic Cooperation and Development.
4 Clause ж, part 1, article 1. of the Federal Law dated 02.08.2019 No. 265-ФЗ “On Amendments to the Federal Law “On Currency Regulation and Currency Control” regarding liberalisation of restrictions on foreign currency transactions by residents using accounts (deposits) opened with banks located outside the Russian Federation and the repatriation of funds.”
5 Federal Law dated 02.12.2019 No. 398-ФЗ “On Amendments to the Federal Law “On Currency Regulation and Currency Control” and the Federal Law “On Amendments to the Federal Law “On Currency Regulation and Currency Control” regarding liberalisation of restrictions on foreign currency transactions by residents using accounts (deposits) opened with banks located outside the Russian Federation and the repatriation of funds.”
6 Bill No. 871811-7 “On Amendments to the Criminal Code of the Russian Federation and article 28-1 of the Criminal Procedure Code of the Russian Federation.”
7 Violation of the requirements of the currency legislation on the return of funds entails the imposition of an administrative fine on persons, engaged in entrepreneurial activities without forming a legal entity, and legal entities in the amount of 1/150 of the key rate of the Central Bank of the Russian Federation on the amount of money returned to the Russian Federation in violation of the established period for each day of delay and (or) in the amount of 3/4 to one amount of money not returned to the Russian Federation; for officials – from 20,000 to 30,000 rubles (part 5, article 15.25. of the Code of the Russian Federation on Administrative Offenses dated 30.12.2001 No. 195-ФЗ).