Foreign exchange operations conducted in Russia are subject to mandatory financial control, one of which is considered foreign exchange.
This type of control in Russia is carried out by the government, authorities and currency control agents in accordance with the legislation currently in force in the country.
Functions and Tasks
The process of currency control is carried out for the sole purpose of guaranteeing the legality of transactions conducted in the Russian markets and related to foreign currency. In a narrower understanding, its functions can be reduced to the implementation of public policy in the field of foreign economy. Federal laws on currency control declare market control methods, since rigidity in this area is considered bad form today and may contribute to the development of the shadow economy. For this reason, another, additional function of currency control can be considered the impact of the market type on the activities of residents of the country, affecting the external economy of the state.
Currency Controlled Transactions
Three main groups of foreign exchange transactions allocated by the Federal Law are subject to currency control:
- Transactions conducted by residents and non-residents of the Russian Federation. A transaction concluded with non-residents of a country almost instantly becomes a subject of state interest, since it is interested in ensuring that citizens of the country and residents of other states do not break the letter of the law. Broad opportunities for international foreign economic activity, coupled with globalization, provide freedom for the development of the shadow economy, therefore, any transactions in which non-residents take part are carried out through currency control.
- Transactions using securities of internal and external type. Securities, as well as transactions with residents and non-residents, are also subject to control. The currency control process is carried out if the work is carried out using securities whose nominal value is foreign currency, or issued by non-residents of the Russian Federation.
- Foreign exchange transactions, that is, transactions using foreign currency. These include both simple currency exchange and settlements with suppliers of goods and services abroad. Any transaction is subject to currency control, during which foreign currency acts as a means of payment.
Currency Control Bodies and Agents
In the economy of our country, the Central Bank and the federal executive bodies authorized by the government act as regulatory bodies.
Currency control agents of the Russian Federation are banks that are responsible to the Central Bank of the country and qualified participants in securities markets that are not classified as authorized by banks. This also includes register holders who report to federal executive agencies on securities and their sales market. Currency control agents are customs authorities and local units of federal authorities.
Control over foreign exchange operations carried out by credit institutions and the operation of foreign exchange exchanges is within the scope of the Central Bank.
Executive bodies of the federal level are currency control agents who monitor transactions with the use of foreign currency by citizens and non-citizens of a country that are not classified as currency exchanges or credit institutions.
Activities of bodies controlling foreign exchange transactions
The activities of the executive bodies that control foreign exchange transactions are coordinated by the Russian government, which also facilitates their interaction with the Central Bank.
The central bank interacts with other currency control authorities and customs. Banks - agents of foreign exchange control - give the customs authorities an executive function in accordance with the laws adopted and operating in the territory of our country in the field of foreign exchange transactions and operations. Actually, this is the function of the currency control agent.
Customs receives from the authorized banking organizations the information necessary for the agent to carry out activities in the manner and amount prescribed by the Central Bank of the country.
What rights do agents have?
According to the laws in force in our country in the field of finance and currency control and within the framework of their own competence, the following rights of currency control agents are distinguished:
- Check whether the acts of currency legislation and currency control bodies are respected by residents and non-residents of the country.
- Check the accuracy and accuracy of accounting and reporting on foreign exchange transactions carried out by residents and non-residents.
- To request information and any data affecting the conduct of foreign exchange transactions, the maintenance and opening of foreign currency accounts. All documents and any information requested by currency control agents must be provided within seven days from the date of sending the corresponding request.
Rights of employees of regulatory bodies
The employees of the currency control bodies, as well as the control bodies themselves, also have their own rights:
- In the case of recorded violations of the law in force in our country, issue instructions according to which all violations must be eliminated in a timely manner.
- In case of violations in compliance with currency control acts, apply the liability measures provided for by the legislation of Russia.
Currency control agents receive from residents and non-residents documents and information necessary to carry out foreign exchange transactions. The Central Bank of the Russian Federation determines the procedure for providing documentation to authorized banks, and the Government determines the procedure for providing securities to currency control agents.
Documents requested by agents and authorities
The exercise of the functions of a currency control agent implies a request for documents from residents and non-residents of the country. Currency control authorities may require the following documents related to the implementation of foreign exchange transactions and other manipulations with cash:
- Identity cards of individuals.
- A document confirming the registration of an individual as an individual entrepreneur.
- For non-residents - papers confirming the status of a legal entity.
- Certificate of registration with the Federal Tax Service.
- Documents confirming the right of individuals to own real estate.
- Documents confirming the rights of residents to conduct foreign exchange transactions, opening deposits and accounts. Such papers are issued by the authorities of the non-resident’s home country if the non-resident cannot receive such a document in his country.
- A notice sent from the Federal Tax Service at the place of residence of the resident that a foreign currency account was opened in a bank outside Russia.
- If current federal laws imply pre-registration, then the relevant documents.
- Any documents on the basis of which currency transactions are performed. documents containing the results of the tender; documents for goods, services or work, rights to information or results of intellectual activity.
- Documents issued by credit institutions and confirming the fact of currency transactions.
- Customs documents, according to which the currency of other states was imported into the country.
- Passport transaction.
Citizens of both Russia and other countries have the full right not to submit documents to agents controlling the currency sector of the economy that are not related to currency transactions and operations.
Requirements for the submitted documents
Documents presented to currency control agents must be current at the time of their transfer. All papers must be drawn up in Russian and certified; preservation of certain parts in a foreign language is allowed. Those documents that confirm the status of non-resident legal entities and issued by state bodies of other countries are legalized in the established manner.
Currency control agents receive either original documents or copies certified by a notary. If only part of the document submitted is related to opening an account or conducting a currency transaction, then only a certified extract from it can be provided.
If a person does not provide the necessary documents, then the authorized bank-agent for currency control may refuse to conduct a currency transaction. Currency control agents accept documents and, after reviewing them, return them back to an individual or legal entity. Only copies of documents certified by the agent are added to the materials of the currency business.
Tax authorities and foreign exchange control authorities consider applications for preliminary registration received from citizens. Such registration is required by laws adopted in the country. The decision to conduct registration or to refuse it is also made by the listed authorities.
Obligations performed by employees, agents and currency control authorities
Allocate the following responsibilities of currency control agents:
- Monitoring of citizens and non-citizens of Russia, in particular, their compliance with laws in the field of economics and foreign exchange transactions.
- Providing information to foreign currency control institutions on conducting foreign exchange operations in accordance with the procedure established by law.
The performance of the functions of an exchange control agent is closely related to commercial, official and banking secrets, in connection with which the authorities, foreign exchange control agents and their employees undertake not to disclose such information.
Sanctions on persons who violate currency laws
If a person conducting foreign exchange transactions or opening a foreign currency account with a bank located outside the Russian Federation has violated the currency legislation of the Russian Federation, agents and foreign exchange control authorities transmit certain information to the foreign exchange control authority that may apply appropriate sanctions to the person. Such information includes:
- For a legal entity: Taxpayer TIN, name of organization, place of state registration, postal and legal address, information on the violation committed with an indication of a specific legal act, date of the violation and the amount by which the currency transaction was made.
- For an individual: initials, identity card information, address of residence, information on the violation committed, specific legal act, date of violation and the amount that the illegal currency transaction or the specified violation cost.
The procedure for transmitting information and other data by authorized banks is established by the Central Bank of the Russian Federation.
The Government, together with the Central Bank, coordinates the scope and procedure for the provision of information and documents necessary for the implementation of the duties of the currency control body.
The legislation provides liability for bodies and agents of foreign exchange control, as well as for their employees, for evading the performance of their own duties and functions and for violating the rights of persons who apply to them, regardless of whether they are citizens of the country or not.
Rights of residents and non-residents of the Russian Federation
Residents and non-residents who engage in currency transactions within the Russian Federation have the following rights:
- Familiarization with the acts of inspections, the implementation of which was carried out by the authorities and agents of foreign exchange control.
- If agents or currency control authorities fail to fulfill their direct responsibilities, individuals may appeal their activities in accordance with the procedure established by law.
- In the event agents or currency control bodies or their employees cause real damage, persons can expect to receive appropriate compensation in the manner prescribed by the laws of the Russian Federation.
Residents, non-residents of the Russian Federation and their responsibilities
All persons, regardless of whether they are residents or not, carrying out foreign exchange operations on the markets and exchanges of the Russian Federation, undertake to ensure:
- Providing information and documents listed in Article 23 of the current federal law to the authorities and agents of foreign exchange control.
- Keeping records in the prescribed manner and reporting on ongoing foreign exchange transactions with the preservation of all necessary documents and materials for the next three years from the date of the foreign exchange transaction, but not earlier than the validity and execution of the drawn up contract.
- Fulfillment of the instructions of the regulatory authorities in relation to the revealed violations of the laws of the Russian Federation and other acts adopted by the currency control authorities.