Restriction for residents to deposit / accept certain funds to their foreign bank accounts
Russian currency legislation in general allows Russian currency residents1 to open bank accounts in foreign banks without restrictions. However, the use of such bank accounts is subject to complex limitations.
Currency legislation of the Russian Federation is based on the provision that only the currency operations that are expressly permitted by law may be carried out. Clause 12 of Federal Law No. 173-FZ “On Foreign Currency Regulation and Currency Control” dated December 10, 2003 provides the exhaustive list of operations through which funds may be deposited to foreign bank accounts. Such operations include, in particula9r: interest on account balance, cash, scholarship, insurance payments from foreign insurers, Russian resident’s own funds, salaries from non-resident employers and a few more.
The transactions that are not listed as the permitted ones, are illegal. One of the most notable restriction for Russian currency residents is the prohibition of accepting the income from the sale of securities to their foreign accounts. In particular, this means that a Russian resident cannot accept to his/her foreign bank account a payment from the sale of securities and/or derivatives. Such payments can be received only in the resident’s bank account in Russia.
At the same time, starting from January 1, 2018 Russian currency residents will be allowed to accept the income from the sale of foreign securities that are listed on certain major stock exchanges (e.g. New York Stock Exchange, Nasdaq, London Stock Exchange, Deutsche Borse).
Please note that the Russian currency residents who carry out illegal transactions through their foreign accounts may become subject to administrative liability in the form of fine in the amount from ¾ to the entire amount of the funds credited to the account as a result of an illegal currency transaction (Clause 1 Article 15.25 of the Russian Administrative Offences Code).
Additionally, please be informed that the limitation period for the currency violations is 2 years from the date of violation.
If you have any questions and need assistance in foreign currency matters please let us know.
1. The following individuals are recognized as Russian currency residents:
- Russian citizens, except those who reside permanently in a foreign country at least 1 year, including those who have a residence permit issued by the authorized public authority of the foreign country, or temporarily staying in a foreign country at least 1 year on based on a work visa or study visa having the period of validity at least 1 year or based on a set of such visas with the general validity of each vise being equal to at least 1 year;
- Foreign citizens and stateless persons who permanently reside in Russia based on a residency permit.
Should any questions arise in connection with the above or if you need any additional materials, please contact Dmitry Churin or Ekaterina Chernenkova, Office of Capital Legal Services.
This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.