On May 14, 2018 the Federal Law No. 325-FZ dated November 14, 2017 “On amendment to articles 19 and 23 of the Federal Law „On Currency Regulation and Currency Control“ and to the Administrative Offences Code of the Russian Federation» (“the Law”) came into force.
This Law has been passed to eliminate the conditions triggering violations in the sphere of currency regulation1 . In particular, the Law significantly amends a bank control procedure on transactions between residents and non-residents.
The main amendments stipulated by the Law are as follows:
1. New requirements as to the cooperation time between residents2 and non-residents3 are established
Parties to an international contract are obliged to set forth the exact time frames for performing their obligations under the contract. Specifically, when exercising a foreign trade activity, residents shall notify bank on time periods for money receipt from non-residents, as well as on time periods for non-residents to perform their obligations under the contract.
Thus, now banks receive information on the specific time of money receipt or performance under the contract, but not on expected time as it was before.
2. List of grounds on which banks can refuse to carry out a currency transaction is expanded
In accordance with amendments stipulated by the Law banks are entitled to refuse to carry out a currency transaction due to the following reasons:
- Failure to provide specific documents requested by the bank;
- Provision of unreliable documents;
- Provision of the documents, which do not correspond to law requirements;
- Resident’s violation of the currency laws with regard to performance of its obligations4 , compliance with requirements to conduct currency operations between residents and non-residents5 or account management in foreign banks6 .
Previously banks were entitled to refuse to conduct a currency transaction in the first or the second case only.
3. Administrative liability for officials is introduced in the sphere of currency laws7 with regard to illegal currency transfers, failure to comply with requirements of money repatriation or non-return of the advance payment
Previously the liability under abovementioned offences was applicable only for persons, who execute the entrepreneurial activity without legal entity establishment. Now all officials will be liable for commitment of these offences, including management bodies and other employees, who impose any organizational or administrative functions8 .
For committing these offences a fine from RUB 20 000 up to RUB 30 000 will be imposed on officials. For similar offence the official will be disqualified from 6 month to 3 years.
Therefore, the new amendments introduced by the Law have increased bank control over currency transactions between residents and non-residents yet again. It is expected, that the amendments will help to eliminate any conditions, triggering violations in currency laws9 .
Besides the abovementioned amendments, new provisions were approved for salary of the employees, who perform their labor duties outside Russia. Now they are entitled to get salary in foreign currency on accounts in foreign banks, which may be located abroad as well.
In connection to this, the correspondent amendments were made to the Labor Code of the Russian Federation10 .
1For more details please see the Explanatory Note to the Bill No. 1166026-6
2Residents include citizens of the Russian Federation, legal entities established in accordance with the Russian legislation, foreign citizens and stateless persons permanently residing in the Russian Federation, other persons in accordance with the clause 6 art. 1 of the Federal Law No. 173-FZ dated December 10, 2003 “On Currency Regulation and Currency Control” (“Law on Currency Regulation”)
3Non-residents include individuals who are not considered as residents, legal entities established in accordance with the legislation of foreign states and have a location outside Russia, as well as other persons in accordance with clause 7 of the Law on Currency Regulation
4Art. 14 of the Law on Currency Regulation
5Art. 9 of the Law on Currency Regulation
6Art. 12 of the Law on Currency Regulation
7Clause 1 art. 15.25 of the Administrative Offences Code of the Russian Federation
8As well as members of the board of directors (supervisory board), collegial executive body and other persons specified in the note to the art. 2.4 of the Administrative Offences Code of the Russian Federation
9For more details please see Explanatory Note to the Bill No. 1166026-6
10Art. 131 of the Labor Code of the Russian Federation