The State Duma allowed foreign tourists to issue Russian bank cards

The deputies adopted in the third reading a law that allows Russian banks to open an account for foreigners and issue them cards to pay in RUSSIA. Tourist industry urged to think about the abolition of entry stamps for tourists

State Duma deputies adopted in the third and final reading a law that will allow Russian banks to open an account for foreign tourists and legal entities, as well as issue cards of the Mir payment system.

Amendments are being made to Law 115-FZ “On countering the legalization (laundering) of proceeds from crime and the financing of terrorism”, the amendments were submitted to the State Duma at the end of March 2023 by Anatoly Aksakov, HEAD of the Financial Market Committee, and Nikolai Zhuravlev, Senator from the Kostroma Region.

The bill was developed on behalf of the government by Rosfinmonitoring together with the Central Bank and other interested bodies. In the explanatory note to the document, the authors note that due to the termination of the activities of the Visa and Mastercard international systems in Russia, foreign citizens planning trips to Russia for tourism and business purposes, as well as for medical care, were cut off from the Russian banking infrastructure and do not have the opportunity to pay for goods and services with your cards.

The bill proposed to simplify the opening of accounts in Russian banks for foreigners, in particular, to abolish the requirement for the obligatory personal presence of a client to open a bank account if the identification of his personality is carried out by a foreign bank on behalf of a Russian credit institution.

How the Intourist card will work

The bill supported by the deputies will give Russian banks the right to open an account for foreigners without their personal presence or the presence of representatives. With the help of an electronic card, a tourist will be able to book a tour, and upon arrival in Russia, pay for services and make purchases.

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To issue a “tourist card”, a Russian bank will need to conclude an agreement and delegate to a foreign bank or other foreign financial organization the identification of a client or his representative, describes the scheme of operation of the mechanism of the Ministry of Economic Development. After completing the procedure in their country, the tourist will be able to remotely open an electronic account in a Russian bank, and upon arrival in Russia, receive a bank card. At the end of May, RBC reported to the Central Bank that a tourist can get a plastic card even at the airport, if necessary.

An electronic tourist card will make it possible to make holidays in Russia more comfortable for foreign citizens, and this measure, along with the planned launch of an electronic visa and agreements on visa-free group trips with CHINA and Iran, will contribute to the growth of inbound tourist flow, Deputy Minister of Economic Development Dmitry Vakhrukov expressed hope.

Questions about the banks in which foreigners will be able to open accounts, the validity of cards and other details of the operation of the mechanism, the representative of Rosfinmonitoring redirected to the Central Bank. RBC sent a request to the Central Bank, to the National Payment Card System (provides processing of transactions on Mir cards) and to large banks.

The press service of Alfa-Bank noted that specific mechanisms for delegating the identification of a foreign credit institution are not yet clear, and interested Russian banks, in order to fully trust the procedures for such identification, will need to analyze local legislation and the compliance risk management system in a particular foreign bank. Under current Russian law, it is the Russian bank that will be held liable for potential violations of Law 115-FZ, which was amended by deputies to make it easier for foreigners to obtain Russian bank cards.

What the experts say

The launch of an electronic tourist card can "drastically improve" the situation with inbound tourism in Russia, says Ilya Umansky, president of the Russian Union of Tourism Industry (RCT). In his opinion, in the current situation it is necessary to remove "the maximum number of barriers" in order to make the stay of foreigners in Russia more comfortable. “Perhaps, it is worth considering the abolition of stamps about staying in Russia in the passport for those foreign citizens for whom this may be undesirable. It is also worth considering the issue of a reverse withdrawal of cash in convertible currency before the departure of a foreigner from Russia,” Umansky added. Iran had already decided on similar concessions for tourists: in 2019, the Iranian authoritiescanceled entry and exit stamps in the passports of foreign citizens so that they would not be afraid to come to the country because of possible problems with obtaining an American visa.

Opening an account remotely is certainly a good step to restore the inbound tourist flow, says Artur Muradyan, head of the Space Travel tour operator and ATOR vice president for outbound tourism. However, the problem of cross-border movements of funds remains to be solved. “In addition to opening an account, a tourist will need to transfer his money to it, and besides, he should have the opportunity to take it back,” Muradyan points out, adding that foreign travelers should not have problems with this.

“Before traveling to Russia, a tourist must send his money to a Russian bank. Here comes the question of trust. Suddenly, a person will not go, will he be able to return the money back - these questions need to be answered and correctly positioned abroad. When there are answers to these questions, the mechanism will be operational,” says Alexander Lvov, chairman of the World Without Borders association. At the same time, the expert adds that the issue of settlements does not cause problems for Chinese citizens , who made the most trips to Russia before the pandemic — the Union Pay system allows Chinese tourists to pay in the country.

The general DIRECTOR of the tour operator "Tari Tour" Marina Levchenko believes that the electronic card is "great", but without the acceptance of an electronic visa, it "is not so relevant yet." Without a solution to the visa issue, the flow of foreign tourists to Russia will remain “sluggish,” the expert believes.

“We believe that the introduction of the bill was immediately preceded by incidents at SPIEF, when participants could not pay with their cards, or cases of “stuck” tourists at Russian airports,” Kira Vinokurova, special adviser on sanctions issues at Pen & Paper, told RBC. Innovations, in her opinion, can have a positive effect on the Russian economy in general, tourism and the investment sector in particular. In practice, there are often cases when investors cannot open a brokerage account without a personal presence in Russia, and opening an account is accompanied by a number of formalities - for example, the need to provide information on temporary registration in Russia, the lawyer notes. “We believe that the adoption of the law under consideration is aimed at solving this problem and attracting funds to the Russian Federation,” Vinokurova said.

Do foreigners visit Russia

The inbound tourist flow to Russia began to decline after the start of the pandemic. In pre-pandemic 2019, foreign citizens made 5 million trips to Russia for tourism purposes, according to data from the FSB border service. Most of the tourists came then from China - 1.4 million, the top three countries where foreign travelers came from also included Germany and South Korea (522.2 and 413.4 thousand trips, respectively).

Restrictions on international flights and tourism, introduced in early 2020 to combat covid-19 , have led to a 15-fold decrease in tourist flow to Russia. In 2020, foreigners made 335.8 thousand trips to Russia (almost all of them were at the beginning of the year, before the introduction of restrictions), and in 2021 the FSB recorded 288.3 thousand tourist trips.

Inbound tourism faced new restrictions in 2022 amid Western sanctions imposed against Russia after the start of a special military operation in Ukraine , affecting international flights and banking operations. The number of tourist trips to the country from abroad decreased by 1.5 times compared to 2021 and by 25.5 times compared to the pre-pandemic year 2019 - in 2022 there were about 200 thousand of them.

In the first quarter of 2023, the inbound tourist flow showed slight signs of recovery: foreign tourists made 17% more trips to Russia than at the same time a year ago (67.7 thousand in total). Most tourists, according to the FSB data, came from Turkey (10 thousand trips, 1.8 times more year on year), China (6.2 thousand trips, 60 times more than last year) and Germany ( 5,000 trips, down 23% year-on-year).

As Maya Lomidze, executive director of the Association of Tour Operators of Russia (ATOR), noted earlier, Russia is waiting for a “renaissance” of inbound tourism if visa-free travel for tourist groups from China resumes under an intergovernmental agreement that was in effect from 2000 to 2019, but was suspended due to the pandemic . . In February 2023, the authorities of Russia and China agreed to renew the visa-free agreement for groups of tourists. In addition, Russia agreed in 2023 to launch a visa-free regime for tourist groups with Iran. But so far agreements on visa-free travel with these countries have not come into effect.

To attract foreign tourists to Russia, the authorities are also preparing to launch electronic visas. The law providing for the launch of a mechanism for simplified obtaining of online visas for citizens of 52 countries was adopted in Russia in 2020, but its entry into force was postponed due to the pandemic. In the fall of 2022, Russian President Vladimir Putin instructed the government, together with the Ministry of Foreign Affairs, the Ministry of Internal Affairs and the Federal Security Service, to think about the renewal of the e-visa for residents of countries not included in the list of unfriendly countries. It is planned to launch electronic visas for foreign tourists by the end of June 2023, Vakhrukov said in May.