OREANDA-NEWS. The mega-regulator will strengthen controls over the repatriation of FX proceeds from foreign trade contracts and measures to counter unscrupulous withdrawal of money from the country.

These measures are stipulated by the Bank of Russia’s draft Ordinance published on the regulator’s website.

The document provides for a twofold (from $50 thousand to $25 thousand) decrease in the upper limit on the amount of foreign trade transactions falling under the requirement on executing transaction specifications. The said will concern organisations and individual entrepreneurs engaged in export, as well as import activities.

Moreover, individuals granting respective loans to non-residents shall also execute transaction specifications. So far, individuals are not bound by this obligation; using private lending to non-residents as a scheme to export money.

Transaction specification is one of FX control instruments, which makes it possible to monitor residents’ compliance with the requirement on the repatriation of money. This document is issued by authorised banks servicing FX transactions between residents and non-residents. Banks submit information obtained from transaction specifications to the Federal Customs Service and Federal Tax Service in an online regime.

As part of its supervisory efforts, the Bank of Russia identifies instances of foreign-trade contract splitting by unscrupulous agents into smaller parts, whose total liabilities do not exceed $49 thousand. In so doing, such agents deliberately evade the requirement on issuing transaction specifications.

This is to remind that the existing maximum amount signaling the need to issue a transaction specification was introduced in 2011. Starting 2004, this amount totaled $5 thousand. The Bank of Russia’s initiative to change this amount is related to the exchange rate dynamics and serves to prevent accounts receivable from growing and to eventually reduce them.

The requirement on executing transaction specifications by resident individuals providing loans to non-residents was in effect in 2004-2012. The return to this requirement will help reduce the number of FX control avoidances by unscrupulous agents via the use of individuals’ accounts. At present, the State Duma is considering a draft law providing for a requirement on the repatriation of money by all and any residents under loan agreements with non-residents.