Strengthening of foreign exchange control

On February 28, 2022, Decree of the President of the Russian Federation on the application of certain special economic measures regarding unfriendly actions by the US and its allies was issued. It includes the following measures to strengthen currency control in order to strengthen the Russian ruble:

  • the obligation for residents participating in foreign economic activity to carry out the mandatory sale of foreign currency in the amount of 80 per cent of the amount of foreign currency credited starting from 1 January 2022 
  • a ban on crediting foreign currency by residents to their accounts opened with banks and organizations abroad,
  • a ban on operations to transfer foreign currency from residents to non-residents as a loan.

To date, this is the main list of measures that relate to export earnings from all countries without exception. If the objectives of the Decree are clear to us, then some of its paragraphs raise questions in interpretation, for example, the procedure for calculating revenue if sales were made from January 1 to March 1, whether the procedure for the sale of foreign currency by the Central Bank was established or it will be done in the near future, responsibility for non-fulfillment or partial fulfillment of this Decree and others. We look forward to more information soon.

In addition, all of the above is framed not as a change to the Federal Law on currency control, but as a Presidential Decree to ensure security, so we can hope for a temporary application of these measures.

If you need legal and accounting support in planning cash flows to reduce currency risks, as well as carrying out the appropriate compliance, Emerging Markets Group experts are happy to assist.