On June 4, 2012 the Bank of Russia issued a new regulation (the "New Regulation") which establishes a procedure for the submission to the relevant authorized banks1 of certain documents and other information by residents and non-residents of the Russian Federation regarding their currency operations, as well as an order for the execution (closure, re-execution) of passports of transaction. The New Regulation will enter into force on October 1, 2012. It will replace the current regulatory regime in this area established by Instruction No. 117-I and Regulation No. 258-P.2

Although the procedure established by the New Regulation does not significantly differ from the existing regulatory regime, it is more detailed and includes several important changes.

Any passports of transaction executed for contracts prior to the New Regulation entering into force will be effective until their closure or amendment on the grounds established in the New Regulation (however, residents will have the right to bring them into compliance with the requirements of the New Regulation in the procedure agreed with the relevant authorized banks at any time). As to existing contracts which do not currently require a passport of transaction but will become subject to this requirement under the New Regulation, a passport of transaction will need to be executed if the first currency operation under such contract will be conducted on or after the date of enactment of the New Regulation.

Below we set forth a summary of some of the key changes under the New Regulation:

  • A currency operation which occurs when the authorized bank is exercising its direct debit rights with respect tomoney standing to the credit of the resident/non-resident's bank account, will not need to be confirmed with appropriate documents. This is one of the exceptions to the requirement established by the New Regulation: that residents and non-residents of the Russian Federationmust submit documents regarding their currency operations to the relevant authorized bank (e.g. a currency operation statement (for currency operations of residents in foreign currency) or a settlement document (for currency operations of residents or non-residents in Russian rubles)).
  • The New Regulation describes in greater detail the particular types of contracts between residents and non-residents for which a passport of transaction is required. In addition, it is now clear that a passport of transaction is necessary, inter alia, for preliminary contracts, the offers to enter into a contract containing all its essential terms and drafts of the relevant contracts provided for conducting the currency operations.3
  • Under the New Regulation, in case of tri-partite andmultilateral agreements with participation by nonresidents, the obligation to execute a passport of transaction for this agreement will be imposed on one of its parties being resident, selected by the other parties-residents at their own discretion.
  • The specific rules regarding the procedure for submission of the relevant documents to the authorized banks are established with respect to some kinds of the currency operations, such as the currency operations (i) with the use of banking cards, (ii) connected with payments by a letter of credit, (iii) in case of assignment of the obligations under a contract, etc.

The abovementioned amendments are introduced by Instruction of the Bank of Russia No. 138-I "On Procedure of Submission of Documents and Information to Authorized Banks by Residents and Non- Residents Relating to Currency Operations, Procedure of Execution of Passports of Transaction, as well as Order of Record and Control of Currency Operations by Authorized Banks".