On 3 April 2017, the President of Russia signed Federal Law No.
59-FZ on Amending the Federal Law on the National Payment System
(the Law). The Law restricts cross-border money transfers
from Russia to countries barring the activity of "Russian
payment systems" (RPS)1.
The restrictions were implemented following the ban of a number
of RPSs imposed last autumn in Ukraine. In particular, under
the decree of the President of Ukraine No. 467/2016 of 17 October
2016, money transfers to Ukraine using payment systems such as
Colibri, Zolotaya Korona, Unistream, LEADER, Anelik and Blizko are
Notably, electronic payment systems such as Yandex.Money, Qiwi
Wallet, Webmoney, and Wallet One (which are popular in Russia) are
not available in Ukraine.
In this context, clients have primarily been using payment
systems operating in Russia but which are controlled by foreign
entities. Payment systems such as MoneyGram and Western Union
have secured a substantial share of the money transfer market
estimated to be in the hundreds of millions of US
Under the Law, where a foreign state prohibits in RPS
cross-border transfers of funds from Russia to such state can
only be made without opening a bank account within the framework of
those systems whose operators (including payment infrastructure
service providers) are directly or indirectly controlled by Russian
legal entities4 and
therefore, payment systems controlled by non-Russian residents
cannot perform such cross-borders transfers.
Critically, the list of potential restrictions that a foreign
state could theoretically impose on RPSs is open-ended
(unlimited). Therefore, any restrictions adopted in foreign
states against RPSs might potentially cause the cessation of the
money flow from Russia to such states.
The Law comes into force only on 5 May 2017. That
said, it has retroactive effect in relation to restrictions imposed
before the effective date of the Law. The mechanics of the
implementation of provisions of the Law (including, the penalty
assessment procedure) are under development.
The new legislative restrictions adopted by the Russian
authorities will materially affect the operations of many payment
Money transfer systems controlled by foreign persons will have
to develop and offer new products (for instance, transfers using
so-called "intermediary recipients").
Alternatively, their clients will have to seek out other options to
transfer money from Russia to a state restricting RPS activities
(direct bank account transfers, postal remittances, etc.).
We will monitor the situation and keep our clients informed of
further changes in this sphere.
2. According to the Bank of Russia, the total volume of money
transfers from Russia to Ukraine in 2016 was in excess of 1 billion
3. A new Article 19.1 has been added to Federal Law No.
161-FZ on the National Payment System of 27 June 2011.
4. "Control" is determined in accordance with
IFRS or, if there is more than 50% of voting shareholding in the
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