The Central Bank of the Russian Federation (the Central Bank) has published a draft of an amendment introducing changes to the well-known Instruction No. 138-I of 4 June 2012 on the procedure for submission of documents and information related to currency operations from residents and non-residents to authorized banks for filing transaction passports and for recording and control of currency operations by the authorized banks (Instruction No.138-I).
The proposed draft instruction (the Draft Instruction) introduces some major substantive amendments in addition to various technical and procedural changes.
Based on Instruction No.138-I as currently in force,1 the obligation to create and maintain a so-called ‘transaction passport’ with an authorized bank applies to a variety of agreements between residents and non-residents (such as loans, leases, cross-border sale-purchase agreements, services agreements and the like) where the value is equal to or exceeds USD 50,000.
With the changes proposed in the Draft Instruction, this threshold may be reduced to USD 25,000. Experts see this as a response to significant devaluation of the ruble against foreign currencies and/or capital outflow.
Currently, Instruction No.138-I applies to individuals only if they are registered entrepreneurs or have a private practice.2 However, the Draft Instruction creates additional obligations for any individual Russian resident granting a loan to a non-resident (the Individual Loan).
For the Individual Loans exceeding the transaction passport threshold, a Russian resident must open a transaction passport with an authorized bank and submit relevant currency control documents (e.g., a currency operation certificate and documents related to currency operations).
Public comments on the Draft Instruction were accepted until 12 July 2016. In practice, the subsequent procedure of considering these comments and undertaking other necessary pre-signing formalities may take up to several months. If the Draft Instruction is signed, it will come into force 60 days after it is officially published. Residents will also have 15 business days to open transaction passports for existing agreements not previously subject to this requirement.3