Post by congregatio on Apr 21, 2017 0:57:04 GMT 4
Russian Federation:Russia Restricts Money Transfers To Countries Barring "Russian Payment Systems"
On 3 April 2017, the President of Russia signed Federal Law No. 59-FZ on Amending the Federal Law on the National Payment System (the Law). The Law restricts cross-border money transfers from Russia to countries barring the activity of "Russian payment systems" (RPS)1.
The restrictions were implemented following the ban of a number of RPSs imposed last autumn in Ukraine. In particular, under the decree of the President of Ukraine No. 467/2016 of 17 October 2016, money transfers to Ukraine using payment systems such as Colibri, Zolotaya Korona, Unistream, LEADER, Anelik and Blizko are prohibited.
Notably, electronic payment systems such as Yandex.Money, Qiwi Wallet, Webmoney, and Wallet One (which are popular in Russia) are not available in Ukraine.
In this context, clients have primarily been using payment systems operating in Russia but which are controlled by foreign entities. Payment systems such as MoneyGram and Western Union have secured a substantial share of the money transfer market estimated to be in the hundreds of millions of US Dollars2.
Under the Law, where a foreign state prohibits in RPS activities3:
cross-border transfers of funds from Russia to such state can only be made without opening a bank account within the framework of those systems whose operators (including payment infrastructure service providers) are directly or indirectly controlled by Russian legal entities4 and
therefore, payment systems controlled by non-Russian residents cannot perform such cross-borders transfers.
Critically, the list of potential restrictions that a foreign state could theoretically impose on RPSs is open-ended (unlimited). Therefore, any restrictions adopted in foreign states against RPSs might potentially cause the cessation of the money flow from Russia to such states.
The Law comes into force only on 5 May 2017. That said, it has retroactive effect in relation to restrictions imposed before the effective date of the Law. The mechanics of the implementation of provisions of the Law (including, the penalty assessment procedure) are under development.
The new legislative restrictions adopted by the Russian authorities will materially affect the operations of many payment service providers.
Money transfer systems controlled by foreign persons will have to develop and offer new products (for instance, transfers using so-called "intermediary recipients"). Alternatively, their clients will have to seek out other options to transfer money from Russia to a state restricting RPS activities (direct bank account transfers, postal remittances, etc.).
We will monitor the situation and keep our clients informed of further changes in this sphere.
Footnotes
1.The Bank of Russia records the operators of such payments systems in the relevant register
2. According to the Bank of Russia, the total volume of money transfers from Russia to Ukraine in 2016 was in excess of 1 billion US Dollars
3. A new Article 19.1 has been added to Federal Law No. 161-FZ on the National Payment System of 27 June 2011.
4. "Control" is determined in accordance with IFRS or, if there is more than 50% of voting shareholding in the relevant entity.
source: Dentons
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
On 3 April 2017, the President of Russia signed Federal Law No. 59-FZ on Amending the Federal Law on the National Payment System (the Law). The Law restricts cross-border money transfers from Russia to countries barring the activity of "Russian payment systems" (RPS)1.
The restrictions were implemented following the ban of a number of RPSs imposed last autumn in Ukraine. In particular, under the decree of the President of Ukraine No. 467/2016 of 17 October 2016, money transfers to Ukraine using payment systems such as Colibri, Zolotaya Korona, Unistream, LEADER, Anelik and Blizko are prohibited.
Notably, electronic payment systems such as Yandex.Money, Qiwi Wallet, Webmoney, and Wallet One (which are popular in Russia) are not available in Ukraine.
In this context, clients have primarily been using payment systems operating in Russia but which are controlled by foreign entities. Payment systems such as MoneyGram and Western Union have secured a substantial share of the money transfer market estimated to be in the hundreds of millions of US Dollars2.
Under the Law, where a foreign state prohibits in RPS activities3:
cross-border transfers of funds from Russia to such state can only be made without opening a bank account within the framework of those systems whose operators (including payment infrastructure service providers) are directly or indirectly controlled by Russian legal entities4 and
therefore, payment systems controlled by non-Russian residents cannot perform such cross-borders transfers.
Critically, the list of potential restrictions that a foreign state could theoretically impose on RPSs is open-ended (unlimited). Therefore, any restrictions adopted in foreign states against RPSs might potentially cause the cessation of the money flow from Russia to such states.
The Law comes into force only on 5 May 2017. That said, it has retroactive effect in relation to restrictions imposed before the effective date of the Law. The mechanics of the implementation of provisions of the Law (including, the penalty assessment procedure) are under development.
The new legislative restrictions adopted by the Russian authorities will materially affect the operations of many payment service providers.
Money transfer systems controlled by foreign persons will have to develop and offer new products (for instance, transfers using so-called "intermediary recipients"). Alternatively, their clients will have to seek out other options to transfer money from Russia to a state restricting RPS activities (direct bank account transfers, postal remittances, etc.).
We will monitor the situation and keep our clients informed of further changes in this sphere.
Footnotes
1.The Bank of Russia records the operators of such payments systems in the relevant register
2. According to the Bank of Russia, the total volume of money transfers from Russia to Ukraine in 2016 was in excess of 1 billion US Dollars
3. A new Article 19.1 has been added to Federal Law No. 161-FZ on the National Payment System of 27 June 2011.
4. "Control" is determined in accordance with IFRS or, if there is more than 50% of voting shareholding in the relevant entity.
source: Dentons
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.