Currency regulation and currency control

Fines reduced for unlawful foreign currency transactions and cancelled for violations committed because of sanctions Pepeliaev Group advises that, on 24 July 2022, a Federal Law came to force that reduces fines for parties involved in foreign trade for unlawful foreign currency transactions and cancels fines for violations committed because of sanctions.

The offset of counterclaims may violate the requirement for the mandatory sale of foreign exchange earnings The official explanation of the Bank of Russia on the issue of the mandatory sale of foreign currency earnings has been published. It follows from the explanation that the fulfilment of obligations under export contracts in a way other than payment to an account with an authorised bank generally violates the requirement for mandatory sale.

New amendments to foreign currency legislation

Pepeliaev Group advises that on 11 August 2020 amendments to the Federal Law “On currency regulation and currency control” will come into effect. The amendments extend possibilities to utilise foreign accounts of foreign branches and representative offices of Russian entities. They also introduce the obligation to submit statements on the flows of financial assets in foreign accounts, and provide various other clarifications.

Material changes concerning administrative liability for violations of currency legislation On 7 July the Russian State Duma adopted a law easing liability for violations of currency legislation. The law’s coming into force may make it possible not to pay the fines for previous violations or to pay such fines at a reduced rate in the event that the fines have not been recovered.  

The timeframe for individuals to submit reports concerning the movement of funds on foreign accounts for 2019 has been extended by six months Resolution No. 792 of the Russian Government dated 30 May 2020 has been published whereby the deadline for individuals to submit reports concerning the movement of funds on foreign accounts (deposits) has been moved from 1 June to 1 December 2020.

Entities and individual entrepreneurs may submit reports concerning the movement of funds on foreign accounts for Q1 2020 within later timeframes which do not include the non-working period

The Russian Federal Tax Service (the “Federal Tax Service”) has published Letters No. VD-4-17/7012@ dated 24 April 2020 and No. VD-4-17/8044@ dated 15 May 2020, which contain clarifications of issues relating to currency control in the conditions of the measures taken to prevent the spread of the coronavirus infection, including the timeframes for entities and individual entrepreneurs to submit reports concerning the movement of funds on foreign accounts. 

Customs authorities have suspended audits of compliance with currency legislation The Russian Government’s Resolution No. 671 dated 13 May 2020 has been published, by which the measures for the temporary suspension of audits of compliance with currency legislation also cover audits performed by the customs authorities as currency control authorities.

Forms of cash flow statements and reporting for cash flows in foreign accounts (deposits) have been changed

The Russian Government’s Resolution No. 528 dated 17 April 2020 has been published introducing changes in the rules for submitting cash flow statements by both organisations and individuals. 

The Bank of Russia temporarily eases individual currency control requirements owing to the spread of COVID-19 Information Letter No. IN-014-12/71 of the Bank of Russia dated 17 April 2020 “On the application of individual provisions of the Bank of Russia’s regulations relating to currency control during the period between 30 March 2020 and 1 July 2020” has been published. 

Amendments to the rules concerning administrative liability for violations of currency legislation

Pepeliaev Group advises of the signing of Federal Law No. 72-FZ dated 1 April 2020 “On amending articles 15.25 and 23.1 of the Russian Code of Administrative Offences”.  

The procedure has been regulated for operations to be carried out on residents’ accounts (deposits) in foreign financial market institutions

Pepeliaev Group advises of the publication of the Bank of Russia's Instruction No. 5371-U dated 24 December 2019 "On cases of funds being credited to accounts (deposits) of residents opened in financial market institutions located outside the Russian Federation, and funds being debited from such accounts (deposits)". 

A promissory note is not always equal to a loan relationship Law firm Pepeliaev Group advises that the Russian Supreme Court (the “Supreme Court”) has issued a ruling[1] to establish the legal nature of the redemption of a promissory note.