What the service includes
The requirements of Federal Law No. 173-FZ and banks’ compliance rules for currency operations are tightened regularly, and breaches lead to serious fines, up to the amount of the operation itself. Many companies learn of a breach only at the bank’s inspection stage, when the money has already been transferred.
We check cross-border transactions for compliance with currency control requirements before money is transferred, prepare the documents the bank needs and support the company when the regulator raises questions.
We assess not just a single payment but the structure of the transaction as a whole. Where settlement is made by set-off of mutual claims, a letter of credit or deferred payment, the bank acting as currency control agent requires separate justification, different from that for a direct transfer. We also deal separately with situations where a breach has already occurred: before the bank passes the information to the supervisory authority, the company usually still has a window to correct the error itself, and we help use it properly.
What the service includes:
Who it is for
The situations clients most often bring to us on this topic.
How we work
A fixed fee and a clear plan of action, agreed before work begins. The timeframes below are indicative and depend on the complexity of the case.
Transaction analysis
We check the terms of the deal with a foreign counterparty against currency legislation. Timeframe: 1-3 days.
Preparing documents
We prepare the documents the bank requires to register the contract and carry out the currency operation. Timeframe: 3-7 days.
Support with settlements
We monitor the repatriation deadlines for foreign currency proceeds, one of the most frequent grounds for fines. Timeframe: the whole term of the transaction.
Defence against claims
If a breach has already been recorded, we examine the possibility of reducing the fine or challenging the decision. Timeframe: depends on the claim.
What you will need at the start
We confirm the exact list for your situation at the consultation. This is a guide so that you arrive at the first meeting prepared.
Key figures
Experience in this practice area specifically, not in practice as a whole.
Common mistakes
“A late repatriation is not a breach.” A delay in receiving foreign currency proceeds from a foreign partner is often seen as a commercial matter between the parties, whereas the missed deadline for crediting the funds in itself constitutes a currency offence, regardless of who is to blame.
Currency documents are treated as a formality. Registering a contract for currency control and preparing the primary documents for a transaction are often left to the accounts department as a technical formality, yet inaccuracies in these very documents most often become the basis for a fine at inspection.
A loan to a non-resident seems a safe operation. Settlements under loan agreements, gifts or other gratuitous transfers of funds with foreign citizens and non-residents are often made without regard to the currency restrictions that apply to such operations, and the breach is discovered only at inspection, when it is hard to correct.
What you get
An opinion on currency risks. The client receives a written assessment of the transaction, identifying the wording and deadlines that create a risk of breach.
A complete set of documents for the bank. A full package for registering the contract, which the bank accepts without revisions.
A position for replying to the bank. Ready arguments and a set of documents in case of an inspection or a request from the bank acting as currency control agent.
A proceeds repatriation schedule. A calendar of control dates under the contract, so that the deadline for receipt of foreign currency proceeds is not missed.
Related
Frequently asked questions
What fine applies for breaching currency control rules?+
It depends on the type of breach, from a percentage of the transaction amount up to the full amount of the unlawful currency operation. Checking a transaction in advance is therefore far cheaper than the potential fine.
What is repatriation of foreign currency proceeds and why does it matter?+
It is the obligation to bring foreign currency proceeds back within the period set by the contract. Missing the deadline is one of the most frequent grounds for fines under Federal Law No. 173-FZ.
Is a transaction passport required for every currency operation?+
The formal transaction passport has been abolished, but registering the contract with the bank is mandatory once threshold amounts are exceeded.
Can a fine for breaching currency control rules be reduced?+
In some cases, yes, by challenging it or by applying for a reduction on the grounds of mitigating circumstances.
Can a breach be corrected before the bank or the tax authority learns of it?+
In some cases, voluntarily remedying the breach and correcting documents before an inspection begins does reduce the risk of a fine, so when a discrepancy is found it makes sense to consult a lawyer straight away rather than wait for an official request.
Is accounting support enough when preparing for a currency control inspection?+
A currency control inspection differs from a tax audit in its set of formal requirements for documents and deadlines, so accounting support alone is usually not enough. A separate legal risk assessment before the documents are handed to the inspector lets you see the vulnerable points in advance.