State Duma passed in the third reading a draft law that allows the customs authorities to investigate offenses related to funds being moved abroad. Let’s have a look at what will change when the amendments take effect.

How are customs authorities now involved in detecting and investigating currency offenses?

Pursuant to the current legislation, customs authorities, also acting as a currency control body, are entitled to request documents related to the movement of goods across the border from companies involved in foreign trade and to check their compliance with the currency laws.

At the same time, it should be noted that the suspension of foreign currency-related inspections until December 31, 2022 concerns only the inspections held by the tax authorities, and not those held by the customs authorities.

The customs authority is authorized to request documents related to suspicious transactions, including for checking compliance with the foreign currency restrictions if there is some doubt about the transaction price or suspicion that the monies are being moved out through transit firms or other schemes.

The customs may initiate a currency inspection based on the information received from other state bodies (e.g. the Russian Central Bank, Ministry of Internal Affairs) or individuals and the information on alleged offenses received upon analysis of internal databases. The currency inspection procedure is set by the Regulations of the Federal Customs Service.

The pre-inspection analysis includes the customs requesting from banks the information on foreign currency transactions under foreign trade contracts and checking compliance with the foreign currency law by reviewing documents and carrying out, if necessary, expert examinations.

If there are any signs of an offense revealed in the course of the inspection, customs may:

• Issue instructions to eliminate the violation;
• Decide to hold a party liable under the Russian Administrative Offenses Code;
• Initiate a criminal case, immediately start urgent investigative actions and transfer the case to investigators at the Ministry of Internal Affairs.

What will change?

The customs authorities will be able not only to initiate, but also to investigate cases on failure to repatriate funds (Part 1 Article 193 of the Russian Criminal Code) and on false information being provided for wire transfers to non-residents (Part 1 Article 193.1 of the Russian Criminal Code). If the crime is considered to have been committed in a particularly large amount or performed by a group, the preliminary investigation, as before, is to be carried out by investigative authorities.

While conducting the inquiry, customs will be able to perform all investigative actions set forth by the Russian Criminal Procedure Code, including interrogations, searches and expert examinations. As a general rule, the investigation takes up to 1 month but it can be extended to up to half a year by a district prosecutor.

As mentioned in the explanatory note to the draft law, the reason for the amendments is that the current mechanism of transferring a criminal case to the investigative authorities is not effective enough. Investigators at the Ministry of Internal Affairs often do not possess the special expertise in combating currency violations and are not experienced in detecting and investigating such crimes.

Statistics also show that there has been a need for the amendments: in 2020-2021, only 30% of cases initiated under Article 193 of the Criminal Code and 50% of cases initiated under Article 193.1 of the Criminal Code made it to court (as informed by courts and the Federal Customs Service). Once the amendments take effect, more and more cases on monies being moved out will come to court, resulting in an increase in the number of convictions for such offenses.

Bearing in mind the extended powers of the customs authority in investigating criminal cases and a developing system of anti-sanctions foreign currency restrictions, companies involved in foreign trade should pay close attention to compliance with the currency laws when entering into transactions with goods.