Currency control

What is happening

A foreign buyer is late paying, the contractual deadline for receiving the proceeds is about to pass, and the bank has already started sending enquiries. The company needs to know which steps will count as sufficient and to record them in time.

An importer paid an advance through a payment agent, and the delivery was delayed or never took place. The money is stuck somewhere between the agent and the supplier, and the tax office is starting to ask about getting it back.

The tax office has drawn up an administrative offence report under Article 15.25 of the Code of Administrative Offences for late filing of documents with the bank or failure to receive export proceeds. The fine is based on the amount of the transaction and may be out of all proportion to the breach.

What the law says

• The requirements for residents' currency transactions are set by Federal Law No. 173-FZ of 10 December 2003 "On Currency Regulation and Currency Control": who may be a party to a transaction, how it is carried out and what documents support it.
• A resident must ensure that proceeds under export contracts are received, and advances under unperformed import contracts are returned, within the contractual time limits (Article 19 of the Currency Control Law). These rules have been adjusted repeatedly by presidential decrees in recent years, so the regime has to be checked as at the date of the transaction.
• Contracts above a threshold set by the Bank of Russia are registered with an authorised bank; as a currency control agent, the bank asks for supporting documents and may refuse to process a transaction.
• The tax authorities, as currency control bodies, check compliance with currency legislation and bring administrative offence proceedings.
• Liability is set by Article 15.25 of the Code of Administrative Offences; under many of its parts the fine is a percentage of the transaction amount, and the limitation period is longer than the general one (Article 4.5 of the Code of Administrative Offences).
• If the company has taken every step within its control to receive the proceeds or recover the advance, that is a ground for relief from liability. Claims, correspondence and lawsuits against the counterparty therefore need to be pursued and kept on file in good time.

What we do

• We review foreign trade contracts against currency requirements: payment terms, provisions on returning advances, currency and payment arrangements.
• We handle contract registration and dealings with the bank: replies to enquiries, statements of supporting documents and amendments.
• We design an internal procedure: who tracks deadlines, how steps to collect proceeds are recorded, which documents are kept and where.
• When payment is late, we prepare claims and proceedings against the foreign counterparty so that the steps are taken and documented in time.
• We prepare explanations and objections in cases under Article 15.25, attend when the report is drawn up and the case is heard, and appeal penalty decisions.
• We advise on transactions with parties from unfriendly states and the restrictions attached to them.

What we will need from you

• Foreign trade contracts with their appendices and supplementary agreements.
• The bank control statement and correspondence with the authorised bank.
• Payment documents and delivery documents: invoices, customs declarations, acceptance certificates.
• Correspondence with the counterparty about deadlines and payment, and any claims sent.
• The offence report, ruling or penalty decision, if proceedings have already begun.