The Federal Tax Service reported an increase in the number of currency violations by 360%

The Federal Tax Service (FTS) identified 74.4 thousand violations of currency legislation in 2023, which is 4.6 times more than a year earlier (in 2022, based on these indicators, 16.2 thousand violations were identified). Such data are presented in the department’s presentation on the results of work for 2023, which RBC studied. The number of cases initiated for alleged currency violations has also increased sharply—by 3.1 times, to 79.7 thousand, as follows from the presentation. However, this figure turned out to be significantly lower than in 2021 (92.4 thousand cases were initiated then). RBC sent a request to the press service of the Federal Tax Service.

Why the number of violations of currency legislation increased sharply in 2023 from a low base of the previous year - in the RBC material.

Currency control during sanctions

Based on the results of 2023, the Federal Tax Service assessed the effectiveness of inspections of compliance with currency legislation at 99.8%, as follows from the tax office’s presentation. The volume of fines collected is not given in the materials, but it is indicated that the efficiency of collecting fines in 2023 is 117.8% (in 2021 and 2022 it was 100%).

The increase in the number of cases and identified violations of currency legislation in 2023 was caused primarily by the moratorium on inspections of compliance with currency legislation, which was in effect from June 1 to December 31, 2022, explains Alexander Ovesnov, adviser to the tax dispute practice of the MEF LEGAL. During 2022, tax authorities could carry out inspections only in relation to violations with an expiring statute of limitations (it is two years) or check compliance with “sanctions” norms established by presidential decrees (the so-called special economic measures in response to sanctions  - on the mandatory repatriation of foreign currency by exporters). revenues and transactions with residents of unfriendly countries).

The noticeably increased figures for 2023 in terms of the number of violations identified and administrative cases initiated may be a consequence of the “delayed effect” of those violations that were committed shortly before the introduction of the moratorium on inspections or during its validity, agrees Anton Rudnev, HEAD of the currency and AML compliance practice at Kept . Thus, what could have been identified in 2022 (but was not identified due to the moratorium) fell within the scope of inspections for 2023.

In 2022, there was another moratorium on administrative liability (moratorium on fines) for a number of currency violations if they were caused by the introduction of Western sanctions. In particular, for illegal currency transactions (purchase and sale of foreign currency, bypassing Russian banks, transfer of funds without opening a bank account, etc.), non-repatriation of foreign currency earnings, failure to fulfill obligations to fulfill or terminate obligations under a foreign trade agreement, non-refund of funds for goods or services of a foreign supplier not imported into RUSSIA. It was later extended until 2023.

Against the backdrop of these measures, in 2022 the number of cases initiated for currency violations decreased by 74%, to 25.5 thousand, and the amount of fines collected - by 42%, to 1.41 billion rubles. (taking into account the amounts collected under decisions made before 2022), follows from the materials of the Federal Tax Service for 2022.

But the moratorium on fines does not work automatically, Ovesnov points out. To apply it in an administrative case, a resident must prove that the failure to comply with the requirements of currency legislation was influenced precisely by restrictive measures introduced by unfriendly foreign states (and not by special economic or restrictive measures introduced by Russia), and also that he did everything from his best efforts to comply with these requirements .

That is why the number of cases initiated in 2023 exceeds the number of currency violations identified by the Federal Tax Service, believes tax consultant Tax Compliance Ekaterina Kopylova. “The difference reflects the number of cases in which residents were able to confirm the legality of their actions and the absence of violations,” she said.

For example, currency legislation generally obliges commodity exporters to inform banks of the exact deadlines specified in foreign trade contracts and to transfer foreign currency earnings to accounts in Russian banks in accordance with these deadlines. Historically, companies have faced fines even for missing deadlines that may not have been their fault. Now, a company should not be found guilty of violating the obligation to repatriate if it did not have the opportunity to comply with the requirements of currency legislation due to the application of Western sanctions (for example, a Russian exporter was included in the sanctions list and a foreign counterparty cannot transfer funds) and if it accepted “all compliance measures within [its] control.”

In August 2022, President Vladimir Putin signed a decree that temporarily, pending appropriate amendments to the law on currency control, exempted Russian legal entities engaged in foreign trade activities from the obligation to return foreign currency EXPORT earnings (or advances for the import of undelivered goods) to accounts in Russian banks . However, then, in October 2023, against the backdrop of a rising ruble exchange rate against the DOLLAR, the president signed a new decree according to which 43 unnamed large exporters are required to transfer 80% of foreign currency earnings to Russian accounts. The requirement was introduced until April 30, 2024 , it will be proposed for extension, said First Deputy Prime Minister Andrei Belousov (the Central Bank opposed the extension).

Most common violations

The moratorium on fines applies only to certain types of violations - accordingly, elements not provided for by its provisions continue to be applied and make up the bulk of currency law violations identified by the Federal Tax Service in 2023, notes Alexey Nesterenko, managing partner of FBK Legal.

“Most often, currency violations were committed related to failure to comply with the rules for providing notifications and relevant reporting, namely, failure by a resident to notify about the opening of an account in a bank of a foreign state (Part 2 of Article 15.25 of the Code of Administrative Offenses) and failure to comply with the procedure for reporting on the movement of funds in bank accounts foreign states (Part 6, Article 15.25 of the Code of Administrative Offenses),” the expert points out.

As RBC previously wrote, today the Federal Tax Service is aware of 1.8 million accounts of Russians abroad and 539 thousand of their owners.

A significant part of the violations detected are indeed related to the provision of notifications and reporting, agrees Ovesnov. We are talking about both foreign accounts and foreign exchange transactions and foreign economic contracts. A significant portion of the statistics may be violations in the area of ​​“correct administration of currency transactions” (violation of deadlines for declaring foreign accounts and reporting on them, failure to fulfill obligations to timely provide supporting documents), Rudnev also says.

“As reasons for the increase in the number of identified violations, one can point to the general trend of strengthening currency control: fines are often issued when residents violate the formal requirements of the law (for example, if documents on currency transactions submitted on time are not translated or not properly certified, if minor inconsistencies are identified in the reporting errors and typos, etc.),” says Ovesnov.

Prospects for tightening control

There are certain expectations regarding the strengthening of foreign exchange control by the Federal Tax Service in 2024, Kopylova believes. If in 2022 and even in 2023 there was a lot of uncertainty in terms of legislative regulation and measures to respond to sanctions from the state, which is why businesses were sometimes “forgiven” some flaws in foreign exchange transactions, now, most likely, there will be such relaxations getting smaller.

“In general, the tax service gives an unambiguous signal to businesses and individuals about the need to comply with the requirements of currency legislation in the current conditions,” says the expert.

The closest attention will continue to be focused on the return of foreign currency earnings under foreign trade contracts, the provision of relevant documents and reporting, Kopylova predicts. Ovesnov agrees with her: he draws attention to the fact that the law on currency control remains a provision requiring residents to ensure proper fulfillment or termination of obligations under foreign trade agreements, even if the requirements for repatriation of foreign currency earnings to a Russian bank were canceled by the presidential decree of August 2022 .

As for individuals, first of all they will check the facts of reporting on foreign accounts, Kopylova believes.