Russian Federation: New Reporting Requirements For Russian Resident Individuals’ Foreign Accounts Make 2015 A Critical Year

Last Updated: 20 March 2015
Article by Timothy Stubbs, John Stansfield and Andrei Strijak

In 2014 Russian lawmakers amended RF Law No. 173-FZ1 (the ˈCCLˈ) by adoption of RF Law No. 218-FZ2Law 218-FZˈ). Amongst other changes, Law 218-FZ removed the exemption from reporting for Russian resident individuals3 ('RRIs') regarding their foreign bank accounts, including deposits ('Foreign Accounts').

This has serious implications for RRIs with Foreign Accounts, regarding reporting and potential liability for failure to do so. The new reporting obligation will in turn make RRIs subject to possible detection of (and fines for) violations of permitted-source rules on Foreign Accounts. It is essential for RRIs to know and understand these rules.


Readers will recall, from 2003 the CCL initially required RRIs to report annually to Russian tax authorities on the balance of their Foreign Accounts at the beginning of each calendar year. After several years, this requirement was abolished. For 7 years, RRIs enjoyed the absence of any reporting on Foreign Accounts. RRIs were only required to notify their tax agency about the opening of a Foreign Account within a month (though RRIs have often overlooked even this).

Meanwhile, the CCL always required Russian resident corporate entities to report on movements in their Foreign Accounts. It was not until December 2005 that the RF Government issued Decree No. 8194 on the exact reporting procedures for Russian resident corporate entities' Foreign Accounts.


The CCL (as now amended) obliges the RF Government to introduce a formal reporting procedure for RRIs' Foreign Accounts. As before, the CCL itself provides no details on the exact procedure for reporting. The RF Government was thus told to 'put the regulatory meat on the legislative bones.'

Although Law 218-FZ was adopted in mid-2014 and stated the RRI reporting obligation would apply as from 1 January 2015, as of today the RF Government has yet to issue such procedure.

In sum, the law requires RRIs to report on their Foreign Accounts. But there is no official regulatory procedure yet for this, including on the periodicity of such reporting or the required supporting documentation. The good news for RRIs is that for now, the RF Code of Administrative Offences (the 'Code of Administrative Offences') establishes no formal administrative liability (and hence no penalty) for RRI's failure to report.

Okay, so why should I worry?

Obviously, the exemption on RRI reporting was not abolished with the intent that it merely be reinstated (though stranger things have happened). Russian regulators are keen to know what their citizens own abroad for various reasons (fiscal and political). Knowing about movements of funds on RRIs' Foreign Accounts was less relevant when there were fewer permitted sources of crediting funds into such Foreign Accounts (the main source being debiting such amounts from Russian individuals' own onshore accounts).5

But given current fiscal pressures on the federal budget, authorities will likely want to look to all possible courses of income - including fines on RRIs for currency-control violations.

Interestingly, at present two draft laws are being considered by the RF State Duma which would amend article 15.256 of the Code of Administrative Offences7: one would increase penalties for failure to report on movements of funds on Russian resident corporate entities' Foreign Accounts. Neither mentions RRI reporting. Most likely, the originator of the two draft laws (the RF Government) understands RRIs' inability to comply with reporting is owed to its own failure to meet its regulatory mandate.

The RF Government did publish in September 2014 on its main internet portal8 a proposed draft law to amend article 15.25 of the Code of Administrative Offences and introduce penalties for RRIs for not abiding with reporting requirements. This draft, which has not yet been officially submitted to the RF State Duma, foresees it would become effective as from 1 January 2016. Whilst not explicitly stated, it appears the RF Government intends to establish annual periodicity for RRI reporting (as compared to quarterly reporting for Russian resident corporate entities).

If these draft laws are ultimately adopted, the penalties for RRIs may be on the level of RUB5,000 (ca EUR75 at present exchange rates) for an individual reporting violation and RUB40,000(ca EUR600) for repeat violations occurring within one year following the first violation.

RRIs are bound to ask, if there are no reporting obligations as such yet, why should I worry? And if the penalties are so low, what's the big deal?

Whilst reporting obligations cannot yet be met in practice, when they are finally adopted there is a high likelihood these will be for calendar year 2015. They may well include supporting documentation obligations requiring RRIs to disclose operations on their Foreign Accounts which (as innocuous as they may seem) constitute formal violations of the permitted-source rules. For example, whilst interest, dividends, rental and other current income from investments may generally (with some exceptions) be credited to Foreign Accounts, sales proceeds from the exits from such investments are not (and formally, before being credited to Foreign Accounts, must be routed directly from the source first to the RRI's Russian bank accounts and only then credited to the RRI's Foreign Accounts – a highly impractical procedure which most RRIs and their foreign counterparties and banks disregard). The RRI's potential liability for such operations, if detected, would be a fine in the amount of 75-100% of each unlawful operation. This creates a potential ticking time bomb for any RRI whose financial arrangements are not strictly in line with the CCL (and particularly more so if the RRI is of political interest to authorities). RRIs must therefore strive immediately to become compliant with the CCL's recently-broadened (though still highly impractical) permitted-source rules.


Based on the above, one may conclude that the RF Government will probably consider 2015 to be a relevant reporting period. It also seems likely that the RF Government will require RRIs to report annually.The absence of a formal RRI reporting procedure makes it practically impossible for RRIs to file a Foreign Account report at present9.

Correspondingly, no penalty currently exists for RRIs' failure to report timely. Thus, RRIs should not yet worry about reporting but nonetheless keep a close eye on the likely imminent adoption of a filing requirement in early 2016 in respect of calendar year 2015. This may well include a supporting document obligation as regards all movements on RRIs' Foreign Accounts during 2015. RRIs must understand the potential liability to which this could expose them, including under permitted-source rules, as regards their 2015 financial arrangements.


[1] RF Law No. 173-FZ 'On currency regulations and currency control' of 10 December 2003.

[2] RF Law No. 218-FZ 'On amending various RF legislative acts' of 21 July 2014.

[3] Note, 'residency' for currency control purposes is different than tax residency. It generally applies to all Russian citizens who have not lived continuously outside Russia, based on supporting foreign immigration documentation, for the preceding one-year-period (and depending on how Russian courts will ultimately interpret CCL article 1(6)-(7), possibly in a single country) and to foreign citizens with Russian residency permits. Travel back to Russia (even for those Russian citizens living abroad a full year) will most likely trigger re-qualification as a resident. As used in this Alert, the term 'RRI' applies to individuals qualifying as residents under the CCL.

[4] Decree No. 819 "on Approving Rules for Provision to Tax Authorities of Reports on Movement of Funds on Accounts (Deposits) in Foreign Banks by Russian Residents" dated 28 December 2005.

[5] Readers will recall, Law 218-FZ significantly increased number of permitted sources for crediting funds into Foreign Accounts. Please see Dentons' client alert, "Russia Loosens Rules on Permitted Foreign Bank Account Income Sources for Russian Residents" of August 2014 for more details. That said, major obvious legislative oversights exist in the list. For example, presently (and as odd as this may seem), proceeds from the sale of investments in overseas assets (including real estate, securities and other financial instruments) are not permitted sources.

[6] This article foresees a penalty for not reporting on movements of funds on Foreign Accounts by Russian-resident corporate entities. Therefore, it would seem logical to amend this particular article to penalize RRIs failing to meet their reporting requirements.

[7] The RF State Duma has already approved these draft laws in their first readings.


[9] We would be surprised if in the present situation Russian tax authorities were to accept any documents confirming movements of funds on Foreign Accounts by RRIs or to confirm the receipt of such reports.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.