As of 1 January 2020 the requirements and restrictions will extend not only to foreign bank accounts but also to accounts with other financial institutions (financial market organizations).
These are defined as organizations entitled to raise funds or other financial assets from residents for depositing, management, investment and (or) carrying out other transactions (i) for the benefit of the residents or (ii) directly or indirectly at the expense of the residents.
Russian individuals who are residents for currency control purposes will be required to:
- file both notifications on opening (closing) or on a change of account details and cash flow reports for accounts with financial institutions (e.g., brokerage accounts with foreign brokers) as they do for accounts with foreign banks; and
- follow the restrictions on credit (debit) transactions to be imposed separately by the Russian Central Bank
Revenue repatriation
There will be a gradual abolishment of the repatriation requirements for earnings under foreign trade agreements between residents and non-residents. This will take place over the period from 1 January 2020 to 1 January 2024.
The liberalization (i) will only cover those agreements the terms and conditions of which specify the amount of liability and that payments are effected in Russian rubles, and (ii) will not cover loan agreements.
Third round of the Russian voluntary disclosure program
The liberalization of currency control regulations takes effect as of 2020 and will not indemnify residents against the risks related to previous periods. Individuals can regularize such risks by participation in the voluntary disclosure program (i.e., “capital amnesty”) that takes place from 1 June 2019 until 29 February 20201. Detailed information on the terms of the third round of the voluntary disclosure program can be found in the information letter below2.
Actions to consider
Taking into account new and existing requirements of Russian legislation, together with the exchange of financial account information, Russian currency control residents with foreign accounts are recommended to:
- analyze the use of accounts with foreign banks and financial organizations from the perspective of both the current tax and currency control legislation and the amendments in effect as of 1 January 2020;
- regularize discovered violations, including by disclosing previously undisclosed accounts and submitting cash flow reports for such accounts;
- consider participating in the third round of the voluntary disclosure program in 2019;
- analyze potential options for restructuring the ownership of foreign assets and foreign accounts in order to comply with Russian tax and currency control regulations.