On November 23, the Russian Ministry of Finance published a draft Resolution regarding the new procedure for settlements between residents and non-residents (the “Draft”) [1]. According to the Draft, residents have the right to receive cash from non-residents in the form of payments under contracts. Thus, the provisions of currency legislation prohibiting cash settlements with non-residents will in fact be repealed.
If the Draft is adopted, residents will be able to receive cash from their foreign counterparties for goods transferred to non-residents, as well as for services rendered, work performed, intellectual property and rights transferred to them, etc. Residents will also be able to receive refunds in cash of advance payments for goods not imported into Russia by non-residents, works not performed, services not rendered, etc.
Residents will have the right to dispose of cash they receive as follows:
- without crediting it to bank accounts, to use it for settlements with non-residents under foreign trade contracts that provide for performance by a non-resident;
- to transfer funds to accounts opened with banks outside Russia;
- to import the funds to Russia and, within 30 working days from the date of import into / receipt in Russia, either sell the currency to an authorized bank with the proceeds subsequent being credited to their accounts, or credit it to their own account in an authorized bank, or deposit the funds to their own cash desk in accordance with the established procedure.
Also, under the Draft, within 45 business days after making cash payments with non-residents, residents will be required to submit to an authorized bank documents confirming the payments and that there are grounds for those payments (documents confirming the transfer of goods, performance of work, provision of services, etc.).
Back in August 2022, the Ministry of Finance proposed to grant residents the right to receive cash currency from non-residents under foreign trade contracts. In October, a Presidential Decree was issued, authorizing the Russian Government in coordination with the Central Bank to establish a procedure for cash payments between residents and non-residents [2]. In pursuance of this Decree, the Ministry of Finance’s Draft has been proposed.
If the Draft enters into force, counterparties will be provided with additional opportunities to fulfill their mutual obligations under sanctions. However, performance in cash currency appears utterly inconvenient for high-value contracts, so is unlikely to become common practice and resolve all difficulties.
[1] Draft Resolution of the Government of the Russian Federation “On Approval of the Rules for the Making of Cash Settlements between Residents and Non-Residents”
[2] Decree No. 737 of the President of the Russian Federation dated October 15, 2022 “On Some Issues of Implementing (Performing) Certain Types of Transactions (Operations)”.