A law has been signed that radically restricts the use of personal accounts in the United Kingdom and the United States

05 / 12 / 2019

On 2 December 2019, the President of Russia signed a federal law providing for amendments to Russian currency control legislation — the changes will primarily affect holders of accounts in foreign banks.

Recall that in the summer of this year, the so-called “relaxed” regime for the use of foreign accounts was introduced: from 1 January 2020, residents will be able to receive funds from non-residents into their accounts on any lawful basis;

The current amendments introduce additional requirements:

For the “relaxed” regime to apply, the account must be opened with a bank in a jurisdiction,

that is a member of the EAEU, or
that exchanges financial information with Russia on an automatic basis. The condition that the countries where the accounts are opened must participate in the FATF and/or the OECD becomes irrelevant;

The updated list of states exchanging financial information with the Russian Federation, which the Federal Tax Service plans to approve by the end of the year, will not include, in particular, the United States and the United Kingdom — the list of grounds on which residents may receive funds into accounts opened there will be extremely limited.

› For example, crediting proceeds from the sale of securities, dividends or coupon income to a resident’s account in the United Kingdom will be treated as a prohibited currency transaction. Accordingly, if such types of income are credited, the account holder may be fined between 75% and 100% of the amount of the currency transaction.

The amendments relating to the requirements for the bank where a resident holds an account will apply to legal relations that arose from 1 January 2018. On the one hand, this will make it possible to avoid liability for currency transactions carried out on accounts in countries that were not members of the FATF/OECD. On the other hand, one cannot ignore the possibility that tax authorities may attempt to hold a resident liable for transactions carried out from 1 January 2018 onwards which, under the amendments to currency control legislation, become unlawful.
At the same time, the principle enshrined in the Code of Administrative Offences of the Russian Federation must be taken into account: a law establishing or aggravating liability has no retroactive effect.