New rules for foreign investors: currency purchases are now permitted
The Central Bank of Russia has lifted restrictions on investors from so-called unfriendly jurisdictions purchasing foreign currency on the domestic market. This measure applies to foreign investors operating on the Russian market through the special mechanisms introduced in July this year.
What are the changes?
Under the new rules, special ‘In’ accounts will be a key tool for foreign investors. Opening such accounts enables investors to invest new funds in Russian assets and to freely withdraw their income, including foreign currency, without risking it being blocked. This rule applies to both investors from unfriendly countries acting through trustees and residents of friendly countries.
It is important to note that previously introduced restrictions continue to apply to assets held in ‘C’ accounts. Funds in these accounts, where payments on securities are credited, still cannot be withdrawn freely and require special permission from a government commission for transactions to be conducted.
What are special accounts?
- Type ‘In’ accounts
These are specialised bank, brokerage or trust accounts created for foreign investors. Their main feature is the separate accounting of assets, which allows investors to circumvent counter-sanction restrictions. Investors can use such accounts to invest in bank deposits and to buy and sell securities on the stock exchange, including shares and bonds issued by Russian companies.
- C-type accounts
This account regime was introduced in response to international sanctions. They are intended for crediting payments on securities belonging to non-residents. Transactions on these accounts are strictly regulated: funds can only be used for mandatory payments such as taxes or commissions and cannot be withdrawn without the authorities’ approval.
Conditions and prospects
The Central Bank has established clear rules for maintaining records of new ‘In’ accounts, obliging financial institutions to exchange information and ensure transaction transparency. It should be noted that investors with ‘C’ accounts can also use the ‘In’ mechanism for new investments; however, funds from ‘C’ accounts cannot be used for this purpose.
This measure aims to create transparent and secure conditions for foreign investment in the Russian economy, offering investors from any jurisdiction a mechanism through which they can access the market and repatriate income.
