RUSSIA. Status under IMF Articles of Agreement. Exchange Measures

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1 (Position as of March 31, 2013) Status under IMF Articles of Agreement Date of membership June 1, Article VIII Date of acceptance: June 1, Article XIV Restrictions and/or multiple currency practices Exchange measures imposed for security reasons In accordance with IMF Executive Board Decision 144-(52/51) Exchange Measures No restrictions reported in the latest IMF staff report as of December 31, Pursuant to UNSC Resolution 1373 of 2001, a procedure has been established for extrajudicial suspension of operations with funds and other property, with the exception of transactions involving the crediting of incoming funds to an account held by an individual or legal entity, if at least one of the parties is an organization or individual known to be involved in terrorist activity, a legal entity directly or indirectly under the ownership or control of such organizations or individuals, or an individual or legal entity acting on behalf of or at the direction of such organizations or individuals. In accordance with UNSC resolutions and Russian legislative acts, restrictions have been imposed on current international transactions for reasons of national and international security against the following: (1) A1-Qaida and the Taliban movement (freezing of financial assets of organization members, prohibition against all operations, ban on transit through or entry into the territory of member countries by individuals connected with these organizations and ban on shipments of arms); (2) Democratic Republic of the Congo (ban on direct and indirect deliveries of arms and on provision of technical assistance and consultation, freezing of financial assets, and ban on entry into member countries of individuals listed in UNSC resolutions); (3) Côte d Ivoire (ban on the sale and delivery of arms and military technical assistance and ban on entry into member countries of individuals listed in the appropriate UN resolutions and freezing of financial assets/ operations thereof); (4) Liberia (ban on the sale and delivery of arms and military technical assistance, ban on entry of individuals listed in the appropriate UN resolutions and freezing of financial assets and operations); and (5) Somalia (ban on the sale and delivery of arms and of military technical and financial assistance). Other security restrictions Certain commercial and financial transactions with the Islamic Republic of Iran, the Democratic People s Republic of Korea, the Democratic Republic of the Congo, Côte d Ivoire, Eritrea, and Libya are prohibited. References to legal instruments and hyperlinks Federal Law 115-FZ of August 7, 2001, on combating Money Laundering and the Financing of Terrorism as amended; Decree 665 of the Russian President of May 27, 2007, on Measures to 2407

2 implement UN Security Council Resolution 1718 of October 14, 2006, as amended; Decree 1593 of the Russian Federation President of November 28, 2007, on Measures to implement UN Security Council Resolution 1737 of December 23, 2006, and 1747 of March 24, 2007, as amended; Bank of Russia Letter 105-T notifying Lending Institutions of the need to comply with Provisions of Decree 665 of the Russian Federation President of May 27, 2007, on Measures to implement UN Security Council Resolution 1718 of October 14, 2006; Decree 786 of the Russian Federation President of May 5, 2000, on Measures to implement UN Security Council Resolution 1267 of October 15, 1999, as amended; Decree 266 of the Russian Federation President of March 6, 2001, on Measures to implement UN Security Council Resolution 1333 of December 19, 2000, as amended; Decree 6 of the Russian Federation President of January 10, 2002, on Measures to implement UN Security Council Resolution 1373 of September 28, 2001; Decree 117 of the Russian Federation President of February 2, 2005, on Measures to implement UN Security Council Resolution 1572 of November 15, 2004; Decree 720 of the Russian Federation President of June 24, 2005, on Measures to implement UN Security Council Resolution 1596 of April 18, 2005, as amended; Decree 227 of the Russian Federation President of March 18, 2006, on Measures to implement UN Security Council Resolution 1643 of December 15, 2005; Decree 1572 of the Russian Federation President of November 23, 2007, on Measures to implement UN Security Council Resolution 1753 of April 27, 2007; Federal Law 281-FZ of December 30, 2006, on Special Economic Measures; Decree 682 of the Russian Federation President of May 5, 2008, on Measures to implement UN Security Council Resolution 1803 of March 3, 2008, as amended; Decree 381 of the Russian Federation President of March 27, 2010, on Measures to implement UN Security Council Resolution 1874 of June 12, 2009; Decree 516 of the Russian Federation President of April 24, 2010, on Measures to implement UN Security Council Resolution 1844 of November 20, 2008; Decree 933 of the Russian Federation President of July 22, 2010, on Measures to implement UN Security Council Resolution 1907 of December 23, 2009; Decree 1154 of the Russian Federation President of September 22, 2010, on Measures to implement UN Security Council Resolution 1929 of June 9, 2010; Decree 1490 of the Russian Federation President of October 17, 2008, on Measures connected with passing UN Security Council Resolution 1807 of March 31, 2008; Bank of Russia Letter 74-T of May 26, 2010, on Decree 381 of the Russian Federation President of March 27, 2010, on Measures to implement UN Security Council Resolution 1874 of June 12, 2009; Bank of Russia Letter 86-T of June 22, 2010, on Decree 516 of the Russian Federation President of April 24, 2010, on Measures to implement UN Security Council Resolution 1844 of November 20, 2008; Bank of Russia Letter 117-T of August 18, 2010, on Measures to implement the UN Security Council Resolution concerning the Democratic People s Republic of Korea (DPRK); Bank of Russia Letter 146-T of November 3, 2010, on Decree 2408

3 933 of the Russian Federation President of July 22, 2010, on Measures to implement UN Security Council Resolution 1907 of December 23, 2009; Decree 1051 of the Russian Federation President of August 23, 2010, on Measures to implement UN Security Council Resolution 1903 of December 17, 2009; Bank of Russia Letter 147-T of November 3, 2010, on Decree 1154 of the Russian Federation President of September 22, 2010, on Measures to implement UN Security Council Resolution 1929 of June 9, 2010; Decree 286 of the Russian Federation President of March 9, 2011, on Measures to implement UN Security Council Resolution 1970 of February 26, 2011 (as amended); Decree 1092 of the Russian Federation President of August 12, 2001, on Measures to implement UN Security Council Resolution 1973 of March 17, 2011 (as amended); Bank of Russia Letter 44-T of April 4, 2011, on Decree 286 of the Russian Federation President of March 9, 2011, on Measures to implement UN Security Council Resolution 1970 of February 26, 2011; Bank of Russia Letter 69-T of May 12, 2011, on Measures to implement UN Security Council Resolutions Regarding the Democratic Republic of the Congo; Bank of Russia Letter 86- T on Measures to implement the UN Security Council Resolution Regarding Côte d Ivoire; Bank of Russia Letter 148T of October 18, 2011, on Decree 1092 of the Russian Federation President of August 12, 2001, on Measures to implement UN Security Council Resolution 1973 of March 17, 2011; Decree 589 of the Russian Federation President of May 6, 2012 on Measures to implement UN Security Council Resolutions 2009 of September 16, 2011, and 2016 of October 27, 2011; Bank of Russia Letter 102-T of July 13, 2012, on Decree 589 of the Russian Federation President of May 6, 2012 on Measures to implement UN Security Council Resolutions 2009 of September 16, 2011, and 2016 of October 27, Exchange Arrangement Currency The currency of Russia is the Russian ruble. Other legal tender Exchange rate structure Unitary Dual Multiple Classification No separate legal tender Currency board Conventional peg Stabilized arrangement Crawling peg Crawl-like arrangement 2409

4 Pegged exchange rate within horizontal bands Other managed arrangement The de jure exchange rate arrangement is other managed arrangement namely a controlled floating exchange rate arrangement. The ruble value of a dual-currency basket is used as the operating benchmark for transactions in the domestic foreign exchange market. The dual-currency basket, including the U.S. dollar and the euro, has been used by the Bank of Russia (BR) as an operating benchmark for currency interventions since Initially, the composition of the basket was 0.10 and US$0.90, but as the participants of the domestic foreign exchange market adapted to the new conditions, the BR revised its composition, increasing the euro share. The basket now is composed of 0.45 and US$0.55. The BR establishes an operational floating range of its allowable levels with automatic revisions of the boundaries depending on the volume of currency interventions. The value of the dual-currency basket is determined both by market factors and by BR interventions. Since the suspension on October 13, 2010, of the fixed exchange rate corridor for the value of the dual-currency basket (Rub 26 Rub 41 since January 2009), no target values or fixed limitations on the BR exchange rate have been established. Interventions take place both on boundaries and within bands. The operating interval also includes the range in which currency interventions are not made. Revision of the boundaries of the operating interval occurs automatically when the established value is reached by the cumulative volume of BR operations. In order to offset a systematic imbalance between supply and demand for foreign exchange in the domestic market, the volume of targeted interventions is not included in the calculation of that amount. Floating Free floating Effective July 24, 2012, the BR widened the band of allowable fluctuation of the ruble from Rub 6 to Rub 7 and reduced the cumulative amount of unplanned interventions triggering an automatic adjustment of the exchange rate band by 5 kopeks from US$500 million to US$450 million. Due to the role of the BR in exchange rate determination, the de facto exchange rate arrangement is also classified as other managed arrangement. The BR intervenes both in interbank currency exchanges and in the OTC interbank market to smooth out daily fluctuations. Since August 2008, the BR has published its volume of interventions both in euros and U.S. dollars by sale and purchase amounts monthly. These data are presented within seven days of the end of the reporting period. Effective May 1, 2012, the BR reports daily foreign exchange interventions data with a two-day lag, with historical data available from January 1, Previously, since June 2011, the BR published weekly foreign exchange intervention data with a one-week lag. Official exchange rate The BR establishes official rates for a number of foreign currencies against the ruble. These rates may be used in calculating state budget revenues and expenditures for payments and settlements by state 2410

5 Monetary policy framework Exchange rate anchor Monetary aggregate target Inflation-targeting framework administrative agencies with enterprises, organizations, and individuals and for taxation and accounting. Regulation of the use of the official exchange rates of foreign currencies against the ruble for various purposes, including determination of the areas of their mandatory use, is not within the BR s purview. Official rates are set every business day and take effect the next calendar day. Information on official rates is published on the BR website the day they are set and in the next edition of the Bank of Russia Bulletin. The official rate for each currency applies until the next official exchange rate becomes effective. The official U.S. dollar ruble exchange rate is calculated on the basis of quotes for this currency pair in the domestic interbank foreign exchange market. The calculation of official rates for other foreign currencies against the ruble is based on quotes of these currencies against the U.S. dollar in the global market and the official exchange rate of the U.S. dollar and the ruble. Other monetary framework The BR develops and conducts monetary policy on the basis of a broad spectrum of macroeconomic and monetary indicators. Exchange tax Exchange subsidy Foreign exchange market By 2015, the BR plans to complete the transition to inflation targeting based on target inflation parameters. Within the framework of the activities in that area, the BR will continue to systematically increase the flexibility of exchange rate formation, creating the conditions for the transition to a free float and will implement measures to improve the system of interest rate instruments, increase the transparency of the monetary policy, and support the development of the banking sector and domestic financial markets. Spot exchange market Pursuant to Federal Law 86-FZ of July 10, 2002, on the Central Bank of the Russian Federation, the BR issues licenses to credit institutions to handle banking transactions (Paragraph 8 of Article 4). Based on information in the State Registration Ledger for Credit Institutions, all foreign exchange bureaus have been closed or converted to other internal structural subdivisions of credit institutions. Previously, foreign exchange bureaus could be opened by credit institutions that handled banking operations based on banking licenses or subsidiaries to which the credit institutions delegated authority for all or some banking operations stipulated in their license (BR Instruction 109-I of January 14, 2004, on the Procedure for the Adoption of a Decision by the BR on the State Registration of Credit Institutions and Issuing a Banking License was superseded by BR Instruction 135-I of April 2, 2010). 2411

6 Operated by the central bank Foreign exchange standing facility Allocation Auction Fixing Internal structural subdivisions of credit institutions (branches) carry out transactions as established by BR regulations. They may handle all or some banking transactions under the banking license of the credit institution and delegated to them. Branches that purchase and sell foreign currency cash must also handle other transactions delegated to them by the credit institution. Transactions with foreign currency cash currently take place according to BR Instruction 136-I of September 16, 2010, on the Procedure for Authorized Banks (Branches) to carry out certain types of Banking Transactions with Foreign Currency in Cash Form and Transactions with Checks (including Traveler s Checks) Whose Nominal Value Is Indicated in Foreign Currency, with the Participation of Individuals and BR Directive 2054-U of August 14, 2008, on the Procedure for Conducting Cash Transactions with Foreign Currency in the Form of Cash at Authorized Banks in Russia (as amended). As of January 1, 2013, the number of credit institutions (other than branches) licensed by the BR to perform banking transactions in foreign exchange was 918. Interbank market The interbank market operates on the exchange and over the counter. As of December 31, 2012, there were 903 participants in the interbank market. There are no restrictions on the spread between the exchange rates of buyers and sellers or on the commissions of market participants. Over the counter Brokerage The U.S. dollar is the main intervention currency. Market making There were nine market-making credit institutions in the Moscow Exchange OJSC exchange section as of March 1, Forward exchange market Forward transactions are concluded by authorized banks. Trading in futures contracts is conducted in currency exchanges, with most trading concentrated in the Moscow Exchange OJSC. Official cover of forward operations References to legal instruments and hyperlinks The BR does not participate in the domestic currency derivatives market, but it does use swap transactions to provide liquidity. Under Russian securities market laws, one-day currency swap transactions by the BR are not considered financial derivatives. Federal Law 86-FZ of July 10, 2002, on the Central Bank of the Russian Federation (Bank of Russia) (with amendments and addenda); BR Regulation 286-P of April 18, 2006, on the setting and publishing by the Central Bank of the Russian Federation of 2412

7 Official Foreign Currency Exchange Rates to the Ruble; BR Directive 2423-U of April 2, 2010, on Closing All Foreign Exchange Bureaus; BR Instruction 135-I of April 2, 2010, on the Procedure for the Bank of Russia to approve a Decision on the State Registration of Credit Institutions and the Issuance of Banking Licenses (as amended); BR Instruction 136-I of September 16, 2010, on the Procedure for Authorized Banks (Branches) to carry out Certain Types of Banking Transactions with Foreign Currency in Cash Form and Transactions with Checks (including Traveler s Checks), the Nominal Value of which is indicated in Foreign Currency, with the Participation of Individuals; BR Directive 2054-U of August 14, 2008, on the Procedure for conducting Cash Transactions with Foreign Currency in the Form of Cash at Authorized Banks in the Russia (as amended); currency_base; monthly Foreign Exchange Intervention Data: hd_base/valint.asp); daily Foreign Exchange Intervention Data: Prescription of currency requirements Controls on the use of domestic currency For current transactions and payments For capital transactions Transactions in capital and money market instruments Transactions in derivatives and other instruments Credit operations Use of foreign exchange among residents Payments arrangements Bilateral payments arrangements Arrangements for Payments and Receipts Settlements between residents in foreign exchange are regulated by law. Operative There are agreements with the CIS countries, Bulgaria, China, Mongolia, and Vietnam. Inoperative Regional arrangements Clearing agreements Barter agreements and open accounts n.a. Administration of control The BR enforces foreign exchange control regulations, supervises and monitors transactions of authorized banks and the authorized exchanges, and regulates banks open foreign exchange positions. 2413

8 Payments arrears Official Private Controls on trade in gold (coins and/or bullion) In addition to the BR, the federal executive authorities (as authorized by the government and within the limits of their jurisdiction) exercise control over foreign exchange transactions, except those by credit institutions and currency exchanges. On domestic ownership and/or trade Information on transactions with precious metals and precious stones subject to obligatory control in accordance with anti-moneylaundering and terrorism financing legislation must be reported to the federal Financial Monitoring Service. On external trade Residents (including banks) must have a license from the Ministry of Industry and Trade to export gold. Banks also must have a license from the BR to conduct transactions in precious metals in order to export gold. See also Decree 1137 of the Russian Federation President of September 20, 2010, on Approval of the Regulation on Importation into Russia from Non-Member Countries of the Customs Union within the Framework of the Eurasian Economic Community (EurAsEC), as well as Exportation from Russia to those Countries of Precious Metals, Precious Stones, and Raw Material Goods Containing Precious Metals (with amendments) and Decision 134 of the Board of the Eurasian Economic Commission of August 16, 2012, on Legal and Regulatory Acts in the Field of Nontariff Regulation (with amendments). Controls on exports and imports of banknotes Foreign and domestic banknotes may be exported and imported by residents and nonresidents in accordance with procedures established by law. A uniform procedure has been established for imports into and exports from Russia of both foreign and domestic currency by residents and nonresidents. On exports All restrictions on imports and exports of foreign currency and rubles by individuals have been removed Domestic currency Resident and nonresident individuals may export rubles from the customs territory of the customs union without limitation. For single exports of domestic currency exceeding the equivalent of US$10,000, a written customs declaration is required indicating the total amount being exported. Single exports of rubles by resident and nonresident legal entities must be declared in writing to the customs authorities. Foreign currency Resident and nonresident individuals may export foreign currency from the customs territory of the customs union without limitation. For single exports of foreign currency exceeding the equivalent of US$10,000, a written customs declaration is required indicating the total amount being exported. Single exports of foreign currency by resident and nonresident legal entities must be declared in writing to the customs authorities. 2414

9 On imports Domestic currency Resident and nonresident individuals may import rubles to the customs territory of the customs union without limitation. For single imports of domestic currency exceeding the equivalent of US$10,000, a written customs declaration is required indicating the total amount being imported. Single imports of rubles by resident and nonresident legal entities must be declared in writing to the customs authorities. Foreign currency Resident and nonresident individuals may import foreign currency to the customs territory of the customs union without limitation. For single imports of foreign currency exceeding the equivalent of US$10,000, a written customs declaration is required indicating the total amount being exported. References to legal instruments and hyperlinks Single imports of foreign currency by resident and nonresident legal entities must be declared in writing to the customs authorities. Federal Law 173-FZ of December 10, 2003, on Foreign Currency Regulation and Foreign Currency Control as amended; Decision 51 of the EurAsEC Interstate Council of July 5, 2010, on the Agreement on the Procedure for Individuals to move Cash and/or Cash Instruments across the Customs Border of the Customs Union. Foreign exchange accounts permitted Resident Accounts Held domestically Residents may open foreign exchange accounts with authorized banks without restriction. Approval required Held abroad Residents may open foreign currency accounts abroad with banks of any country with subsequent notification to the tax authorities. Resident authorized banks licensed to engage in ruble and foreign exchange transactions may maintain correspondent accounts with nonresident banks. They may also open accounts with nonresident banks to service the activities of their representative offices abroad, subject to notification requirements. Foreign branches of authorized banks may freely maintain accounts with nonresident banks subject to the permission of the parent bank. Residents may transfer to their accounts (deposits) with banks outside Russia funds from their accounts (deposits) with authorized banks or from other accounts (deposits) with banks outside Russia. Residents transfers of funds to their accounts (deposits) with banks outside Russia from their accounts (deposits) with authorized banks require presentation at the time of the first transfer of notification from the tax authority of the resident s official place of residence and acknowledgment of receipt of that notification, except for transactions legally required by a foreign country and transactions connected with the conditions for opening the account. 2415

10 Funds from the following may be credited to residents accounts (deposits) with banks outside Russia: (1) transfers in connection with execution of the budgets of the Russian budgetary system; (2) transfers for activities of Russian diplomatic missions, consulates, and other official offices abroad and of permanent missions to interstate or intergovernmental organizations; (3) transfers by a Russian resident payable to another resident s account abroad that do not exceed in one business day through one authorized bank the equivalent of US$5,000 at the official BR exchange rate on the date the funds are withdrawn; (4) transfers for settlements between transportation entities and individuals abroad, as well as with branches, representative offices, and other subdivisions of legal entities, under passenger transportation agreements; (5) transfers by residents from their accounts with authorized banks to accounts of other related residents (spouse or close relative direct forebear or descendant: parent, child, brother, sister, grandparent, grandchild, full-blooded and half-blooded, with a common father or mother, adopted parent, adopted child) with authorized banks or with banks abroad; (6) transfers of foreign exchange from accounts with authorized banks to the accounts of Russian diplomatic missions, consulates, and other official representative offices abroad and to the accounts of permanent Russian missions to interstate or intergovernmental organizations by federal executive branch authorities through their representatives or representative offices and by entities authorized to use those accounts for the payment of wages and for other payments for maintenance of their representatives or personnel of their representative offices abroad and for payment of business travel expenses; and (7) settlements with residents abroad and with the branches, representative offices, and other subdivisions of legal entities established under Russian law, with nonresident individuals, under contracts for the transportation of passengers, and settlements in foreign exchange and rubles with resident individuals abroad and with nonresident individuals, under contracts for the transportation of freight by individuals for personal, family, household, and other nonbusiness activity. Funds may also be credited to accounts (deposits) with banks abroad as follows: (1) Foreign currency may be credited to accounts of resident legal entities or third parties to fulfill their obligations under credit facilities and loan agreements with nonresident agents of foreign governments and under credit facilities and loan agreements with residents of OECD and FATF members for a period exceeding two years. (2) Nonresident contractors may pay the local expenses of residents in connection with construction of properties in foreign countries; remaining funds must be transferred to residents accounts with authorized banks. (3) Foreign currency obtained by residents from exhibitions and sports, cultural, and other similar events abroad must be used to cover expenses of such events, for the duration of the event. (4) Foreign currency proceeds must be credited to the accounts of resident transportation entities with banks abroad for payment of aerial navigation, airport, and port fees and other fees in foreign countries; expenses associated with the servicing of air, river, and sea craft and other vehicles of such transportation entities and their passengers abroad; and expenses 2416

11 Approval required Accounts in domestic currency held abroad Accounts in domestic currency convertible into foreign currency References to legal instruments and hyperlinks for the activities of branches, representative offices, and other offices of such transportation entities located abroad. The foreign currency from (1) and (3) above credited to the accounts of residents or third parties with banks abroad must be used to meet the residents obligations as specified or transferred to accounts with authorized banks. Residents may open accounts in rubles abroad with banks of any country, with subsequent notification to the tax authorities. Federal Law 173-FZ of December 10, 2003, on Foreign Exchange Regulation and Foreign Exchange Control as amended; Bank of Russia Directive 1688-U of May 29, 2006, on the Lifting of Requirements Regarding the Mandatory Use of Special Accounts in the Performance of Foreign Exchange Transactions and on the Recognition of Certain Regulatory Acts of the Bank of Russia as no longer in force; Bank of Russia Directive 1689-U of May 29, 2006, on the Recognition of Certain Regulatory Acts of the Bank of Russia as no longer in force; Bank of Russia Instruction 28- I of September 14, 2006, on the Opening and Closing of Bank Accounts and Deposit Accounts (Deposits) (as amended). Foreign exchange accounts permitted Approval required Domestic currency accounts Convertible into foreign currency Approval required Blocked accounts References to legal instruments and hyperlinks Nonresident Accounts Federal Law 173-FZ of December 10, 2003, on Foreign Exchange Regulation and Foreign Exchange Control as amended; Bank of Russia Directive 1688-U of May 29, 2006, on the Lifting of Requirements Regarding the Mandatory Use of Special Accounts in the Performance of Foreign Exchange Transactions and on the Recognition of Certain Regulatory Acts of the Bank of Russia as no longer in force; Bank of Russia Directive 1689-U of May 29, 2006, on the Recognition of Certain Regulatory Acts of the Bank of Russia as no longer in force; Bank of Russia Instruction 28- I of September 14, 2006, on the Opening and Closing of Bank Accounts and Deposit Accounts (Deposits) (as amended). 2417

12 Imports and Import Payments Foreign exchange budget Financing requirements for imports Minimum financing requirements Advance payment requirements Advance import deposits Documentation requirements for release of foreign exchange for imports Domiciliation requirements Residents (excluding individuals) are required to set up a transaction passport in an authorized bank for recording, reporting, and foreign exchange control purposes in connection with foreign exchange transactions between residents and nonresidents (Article 20 of Federal Law 173-FZ of December 10, 2003, on Foreign Exchange Regulation and Foreign Exchange Control (hereinafter, Federal Law 173-FZ). The passport must include the following: information on the resident and its foreign counterparty, general information on the transaction, including contract date, contract number (if any), total for the transaction (if available), and currency of the transaction; completion date of the obligations associated with the transaction; and information on the authorized bank in which the deal passport is formalized and the settlement accounts. A transaction passport must be set up for foreign trade contracts (agreements) between residents (excluding individuals) and nonresidents that stipulates foreign exchange operations in the form of settlements and transfers through the accounts of the resident in authorized banks and/or through accounts in a nonresident bank as follows: (1) involving goods exported from or imported into Russia, work done, services rendered, and information and intellectual property, including the exclusive rights to it, transferred under the foreign trade agreement (contract); (2) involving the transfer of real estate on the basis of a rental agreement or a financial rental (leasing) agreement; (3) involving loans by residents in foreign exchange and rubles to nonresidents and loans to residents in foreign exchange and rubles from nonresidents under a credit agreement (loan agreement). A transaction passport is required for each contract (credit agreement) equal to or exceeding US$50,000 at the official BR exchange rate. To set up a transaction passport in an authorized bank, the resident must submit a completed form and supporting documentation. The authorized bank must set up the passport electronically and maintain it until the contract (credit agreement) is completed. The passport is used by foreign exchange control authorities and agents for foreign exchange control under Federal Law 173-FZ. 2418

13 Preshipment inspection Residents (excluding individuals) must set up a transaction passport in an authorized bank for each contract (credit agreement) equal to or exceeding US$50,000 at the official BR exchange rate. Letters of credit Import licenses used as exchange licenses Other Import licenses and other nontariff measures Positive list Negative list Private imports of ethyl alcohol are prohibited. Licenses are required for imports of various alcoholic products, as well as dualpurpose items, military equipment, medicine, industrial waste, and ozone-depleting substances. Open general licenses Licenses with quotas Other nontariff measures Import taxes and/or tariffs Most customs duties range from 5% to 25%, but duties up to 80% are levied on certain sensitive goods. The following products are exempt from duties: insulin and some other pharmaceuticals, printed materials, cotton and cotton waste, some animal species, raw diamonds, wheelchairs, works of art, collectibles, and antiques. Imports of goods on the approved list from developing countries are subject to a customs duty that is 75% of the applicable rate. Taxes collected through the exchange system State import monopoly References to legal instruments and hyperlinks Federal Law 173-FZ of December 10, 2003, on Foreign Exchange Regulation and Foreign Exchange Control as amended; Russian Federation Government Resolution 400 of June 29, 2006, on the Recognition of Russian Federation Government Resolution 302 of May 16, 2005, as no longer in force; Federal Law 246-FZ of December 29, 2006, on Amendments to Articles 11 and 18 of the Federal Law on Banks and Banking and Article 61 of the Federal Law on the Central Bank of the Russian Federation (Bank of Russia); Federal Law 86-FZ of July 10, 2002, on the Central Bank of the Russian Federation (Bank of Russia) as amended; Bank of Russia Instruction 1380I of June 4, 2012 on the Rules for Residents and Nonresidents in submitting to Authorized Banks Documents and Information Associated with Foreign Exchange Operations and the Rules for setting up Deal Passports, as well as the Rules for Authorized Banks in Recording Foreign Exchange Operations and Maintaining Such Records. 2419

14 Exports and Export Proceeds Repatriation requirements All proceeds from exports received by residents must be credited in full to their accounts opened with authorized banks except as indicated below. Residents are not required to credit foreign currency or rubles to their bank accounts at authorized banks if (1) Foreign currency is credited to accounts of resident legal entities or third parties with banks abroad to fulfill the obligations of resident legal entities under credit facilities and loan agreements with nonresident entities that are agents of foreign governments, and under credit facilities and loan agreements entered into with residents of OECD or FATF members for a period exceeding two years. (2) Nonresident contractors pay the local expenses of residents in connection with residents construction of properties in foreign countries, after which any remaining funds must be transferred to residents accounts with authorized banks. (3) Foreign currency obtained by residents from exhibitions and sports, cultural, and other similar events abroad is used to cover expenses of such events, for the duration of the event. (4) Foreign currency is used to offset counterclaims for obligations between (a) resident and nonresident entities that conduct fishing operations outside Russia and that provide services outside Russia to the residents under agency agreements with them; (b) resident and nonresident transportation entities performing services outside Russia for the residents under agreements with them; or (c) resident and nonresident transportation entities if the settlements between them are made through specialized settlement entities established by international organizations in the area of international transportation and of which such resident transportation entities are members. (5) Foreign currency is used to offset counterclaims for obligations resulting from reinsurance agreements or service agreements connected with reinsurance agreements between nonresidents and resident insurance entities or insurance brokers. (6) Foreign currency proceeds are credited to the accounts of resident transportation entities with banks abroad to pay for the expenses of such transportation entities abroad in connection with the payment of aerial navigation, airport and port fees, and other mandatory fees in foreign countries; expenses associated with the servicing of air, river, and sea craft and other vehicles and their passengers abroad; and expenses connected with branches, representative offices, and other offices abroad. The foreign currency credited, in accordance with (1) and (3) above, to the accounts of residents or third parties with banks abroad must be used to meet the residents obligations as specified or transferred to accounts with authorized banks. Residents have fulfilled the repatriation requirement if they have arranged for receipt in their bank account of payment under a contract insuring against a nonresident s failure to fulfill obligations under a foreign trade contract as specified in Federal Law 82- FZ of May 17, 2007, on the Development Bank, for activities related to insuring export loans and investments against business and/or political risks, provided the ratio in the insurance contract between 2420

15 Surrender requirements Surrender to the central bank Surrender to authorized dealers Financing requirements the insurance amount and the insurance value (level of indemnification) equals or exceeds the value established by law. Documentation requirements Residents (excluding individuals) must set up a transaction passport in an authorized bank for recording, reporting, and foreign exchange control purposes on foreign exchange transactions between residents and nonresidents (Article 20 of Federal Law 173-FZ of December 10, 2003, on Foreign Exchange Regulation and Foreign Exchange Control (hereinafter, Federal Law 173-FZ). Letters of credit Guarantees Domiciliation The passport must include the following: information on the resident and its foreign counterparty, general information on the transaction, including contract date, contract number (if any), total for the transaction (if available), and currency of the transaction; completion date of the obligations associated with the transaction; and information on the authorized bank in which the passport is formalized and the settlement accounts. A transaction passport must be set up for foreign trade contracts (agreements) between residents (excluding individuals) and nonresidents that stipulates foreign exchange operations in the form of settlements and transfers through the accounts of the resident in authorized banks and/or through accounts in a nonresident bank as follows: (1) involving goods exported from or imported into Russia, work done, services rendered, and information and intellectual property, including the exclusive rights to it, transferred under the foreign trade agreement (contract); (2) involving the transfer of real estate on the basis of a rental agreement or a financial rental (leasing) agreement; (3) involving loans by residents in foreign exchange and rubles to nonresidents and loans to residents in foreign exchange and rubles from nonresidents under a credit agreement (loan agreement). A transaction passport is required for each contract (credit agreement) equal to or exceeding US$50,000 at the official BR exchange rate. To set up a transaction passport in an authorized bank, the resident must submit a completed form and supporting documentation. The authorized bank must set up the passport electronically and maintain it until the contract (credit agreement) is completed. The passport is used by foreign exchange control authorities and agents for foreign exchange control under Federal Law 173-FZ. 2421

16 Preshipment inspection Residents (excluding individuals) must set up a transaction passport in an authorized bank for each contract (credit agreement) equal to or exceeding US$50,000 at the official BR exchange rate. Other Export licenses Without quotas With quotas Export taxes Collected through the exchange system Other export taxes Export taxes are levied on 141 items, and the rate for most of them is 6.5%, with a maximum rate of 50% for nonferrous scrap. A number of goods, including crude oil and petroleum products, are subject to specific duties. Certain goods are subject to combined duties. References to legal instruments and hyperlinks Federal Law 173-FZ of December 10, 2003, on Foreign Exchange Regulation and Foreign Exchange Control, as amended; Federal Law 82-FZ of May 17, 2007, on the Development Bank, as amended; Bank of Russia Instruction 1380I of June 4, 2012 on the Rules for Residents and Nonresidents in submitting to Authorized Banks Documents and Information Associated with Foreign Exchange Operations and the Rules for setting up Deal Passports, as well as the Rules for Authorized Banks in recording Foreign Exchange Transactions and maintaining Such Records. Payments for Invisible Transactions and Current Transfers Controls on these transfers Trade-related payments Prior approval Quantitative limits Indicative limits/bona fide test Investment-related payments Prior approval Quantitative limits Indicative limits/bona fide test Payments for travel Prior approval Quantitative limits Indicative limits/bona fide test Personal payments Prior approval 2422

17 Quantitative limits Indicative limits/bona fide test Foreign workers wages Prior approval Quantitative limits Indicative limits/bona fide test Credit card use abroad Prior approval Quantitative limits Indicative limits/bona fide test Other payments Prior approval Quantitative limits Indicative limits/bona fide test References to legal instruments and hyperlinks n.a. Proceeds from Invisible Transactions and Current Transfers Repatriation requirements All proceeds from exports received by residents must be credited in full to their accounts opened with authorized banks except as indicated below. Residents are not required to credit foreign currency or rubles to their bank accounts at authorized banks if (1) Foreign currency is credited to accounts of resident legal entities or third parties with banks abroad to fulfill the obligations of resident legal entities under credit facilities and loan agreements with nonresident entities that are agents of foreign governments, and under credit facilities and loan agreements entered into with residents of OECD or FATF members for a period exceeding two years. (2) Nonresident contractors pay the local expenses of residents in connection with residents construction of properties in foreign countries after which any remaining funds must be transferred to residents accounts with authorized banks. (3) Foreign currency obtained by residents from exhibitions and sports, cultural, and other similar events abroad is used to cover expenses of such events, for the duration of the event. (4) Foreign currency is used to offset counterclaims for obligations between (a) resident and nonresident entities that conduct fishing operations outside Russia and that provide services outside Russia to the residents under agency agreements with them; (b) resident and nonresident transportation entities performing services outside Russia for the residents under agreements with them; or (c) resident and nonresident transportation entities if the settlements between them are made through specialized settlement entities established by international organizations in the area of international 2423

18 Surrender requirements Surrender to the central bank Surrender to authorized dealers Restrictions on use of funds References to legal instruments and hyperlinks transportation and of which such resident transportation entities are members. (5) Foreign currency is used to offset counterclaims for obligations resulting from reinsurance agreements or service agreements connected with reinsurance agreements between nonresidents and resident insurance entities or insurance brokers. (6) Foreign currency proceeds are credited to the accounts of resident transportation entities with banks abroad to pay for their expenses abroad in connection with the payment of aerial navigation, airport and port fees, and other mandatory fees in foreign countries; expenses associated with the servicing of air, river, and sea craft and other vehicles of such transportation entities and their passengers abroad; and expenses in connection with the activities of branches, representative offices, and other offices of such transportation entities abroad. The foreign currency credited, in accordance with Paragraphs (1) and (3) above, to the accounts of residents or third parties with banks abroad must be used to meet the residents obligations as specified or transferred to accounts opened with authorized banks. Residents have fulfilled the repatriation requirement if they have arranged for receipt in their bank account of payment under a contract insuring against a nonresident s failure to fulfill obligations under a foreign trade contract as specified in Federal Law 82- FZ of May 17, 2007, on the Development Bank, for activities related to insuring export loans and investments against business and/or political risks, provided the ratio in the insurance contract between the insurance amount and the insurance value (level of indemnification) equals or exceeds the value established by law. Federal Law 173-FZ of December 10, 2003, on Foreign Exchange Regulation and Foreign Exchange Control, as amended; Federal Law 82-FZ of May 17, 2007, on the Development Bank, as amended. Controls on capital transactions Repatriation requirements Surrender requirements Surrender to the central bank Surrender to authorized dealers Controls on capital and money market instruments On capital market securities Capital Transactions 2424

19 Shares or other securities of a participating nature Purchase locally by nonresidents The Federal Law on Foreign Exchange Regulation and Foreign Exchange Control does not restrict the purchase of shares or other unit-type securities by nonresidents (either from nonresidents or residents). Special restrictions are in place for the banking sector. Transactions between nonresidents with domestic securities in Russia are performed under requirements set out in the antimonopoly and the securities market law. Pursuant to Federal Law 57-FZ of April 29, 2008, on the Procedure for making Foreign Investments in Business Entities that are of Strategic Significance in providing for the National Defense and State Security, as amended, transactions resulting in control by a foreign investor or group of persons over business entities that are of strategic significance are subject to the approval by the federal executive body authorized to carry out control functions over foreign investments in Russia. Sale or issue locally by nonresidents Under the foreign exchange law, there are no restrictions on the sale or issuance of shares or other unit-type securities by nonresidents. Placement and trade of securities of foreign issuers are governed by the law on the securities market. According to Article 51.1 of Federal Law 39-FZ of April 22, 1996, on the Securities Market, as amended: (1) Foreign financial instruments may be traded in Russia as securities of foreign issuers, provided all the following conditions are met: (a) Foreign financial instruments are assigned an international securities identification code (number) and an international financial instrument classification code. (b) Foreign financial instruments are classified as securities as defined by relevant federal agency. (2) Securities of the following that meet the requirements of Paragraph (1) may be placed and/or publicly traded: (a) foreign entities in OECD countries, FATF members or observers, members of the committee of experts of the Council of Europe assessing measures to combat money laundering and financing of terrorism (MONEYVAL), and/or members of the Common Economic Space; (b) foreign entities in countries with agencies (relevant organizations) with which the federal executive agency responsible for the securities market has an agreement; (c) international financial entities approved by Russian Government; (d) the foreign governments indicated in (a) and (b) and those countries autonomous CBs and administrative-territorial units; and (e) foreign organizations whose securities are listed on an approved exchange under Paragraph 4 of Article (3) Foreign issuers securities may be placed in Russia with authorization by decision by the relevant executive agency, with a registered prospectus. (4) Foreign issuers securities that meet the requirements of Paragraphs 1 and 2 of Article 51.1 may be traded publicly with 2425

20 permission of a Russian exchange. Permission may be granted if the securities, except securities of international financial entities, are listed on a foreign exchange approved by the relevant federal executive agency and neither Russian law nor international law has placed any restrictions on the securities. (5) International financial entities securities may be publicly placed and/or traded if they may not be traded freely among an unrestricted group of persons and/or offered to an unrestricted group of persons. Purchase abroad by residents The foreign exchange law does not prohibit the purchase abroad of shares or other unit-type securities by residents. Sale or issue abroad by residents The foreign exchange law does not prohibit the sale or issuance abroad of shares or other unit-type securities by residents. Under the securities law, the placement and trading of securities of Russian issuers abroad require authorization by the federal executive body in charge of the securities market. Bonds or other debt securities Rules similar to the rules governing transactions with shares or other unit-type securities apply. Purchase locally by nonresidents There are no restrictions on purchases of bonds or other debt securities by nonresidents from nonresidents or residents. Transactions between nonresidents with domestic securities must adhere to the requirements of the antimonopoly and the securities market law. Sale or issue locally by nonresidents Under the foreign exchange law, there are no restrictions on the sale or issuance of bonds or other debt securities by nonresidents. The placing and trading of securities of foreign issuers in Russia are governed by the law on the securities market. According to Article 51.1 of Federal Law 39-FZ of April 22, 1996, on the Securities Market, as amended: (1) Foreign financial instruments may be traded in Russia as securities of foreign issuers, provided all the following conditions are met: (a) Foreign financial instruments are assigned an international securities identification code (number) and an international financial instrument classification code. (b) Foreign financial instruments are classified as securities as defined by relevant federal agency. (2) Securities of the following foreign issuers meeting the requirements of Paragraph (1) may be placed and/or publicly traded: (a) foreign entities established in countries that are members of the OECD, members or observers of the group involved in developing financial measures to combat money laundering (FATF), and/or members of the committee of experts of the Council of Europe assessing measures to combat money laundering and financing of terrorism (MONEYVAL) and/or members of the Common Economic Space; (b) foreign entities established in countries, with the relevant agencies (relevant organizations) of which the federal executive agency responsible for the securities market has concluded an agreement; (c) international financial entities on the list approved by Russian Government; (d) the foreign governments indicated in (a) and (b), as well as CBs and administrative-territorial 2426