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Restrictions to carry out foreign exchange transactions were introduced by the decree of the President of the Russian Federation
DATE: March 2, 2022 | AUTHOR: AT
On February 28, 2022, Presidential Decree No. 79 “On the application of special economic measures in connection with unfriendly actions of the United States and foreign states and international organizations joining them” was signed.
According to paragraph 3 of the Decree, residents (i.e., citizens of Russia) are prohibited starting from March 1, 2022:
а) execution of currency transactions associated with the provision of foreign currency by residents in favor of non-residents under loan agreements.
The wording of the Decree also makes it possible to interpret it as prohibiting repayment by residents of loans in foreign currency received from non-residents.
b) crediting by residents of foreign currency to their accounts (deposits) opened with banks and other financial market organizations located outside the territory of the Russian Federation.
The wording of the Decree differs from the terms used in Law No. 173 FZ “On Currency Regulation,” but in our opinion the Decree is aimed at prohibiting all foreign currency inflows to Russian residents’ accounts outside of Russia.
c) transfer of funds without opening a bank account using electronic means of payment provided by foreign providers of payment services
This prohibition covers the use of foreign payment systems by residents in any way.
Please be reminded that illegal currency transactions are subject to administrative liability in the form of a fine ranging from 75% to 100% of the transaction amount. Although the question remains open as to whether a violation of the Decree will be interpreted by the courts as a violation of currency legislation, we recommend that such liability may be applied.
We are monitoring the changes and will keep you informed of developments.