Home / Doing business in Russia 2020 / Banking sector / FATCA and CRS
Doing business in Russia 2020
  1. Introduction
    1. Political and administrative structure
    2. Legal environment
  2. Common forms of business structures for foreign investors
    1. Main types of structure
    2. Registration, liquidation and reorganisation of business structures
    3. Shareholders’ and participants’ agreements
    4. Strategic industries
  3. Anti-monopoly issues
    1. General legal and regulatory framework
    2. Scope of application of the Competition Law
    3. Anti-competitive practices and restriction of competition
    4. Liability
  4. Tax system
    1. General approach
    2. Corporate taxation
    3. Incentives
    4. Special tax regimes
    5. Taxation of individuals
    6. Double taxation treaties
  5. Customs regulations
    1. General approach
    2. Trade between EEU and non-EEU countries
    3. Mutual trade between the EEU members
  6. Currency control
    1. Foreign currency transactions
    2. Consequences of breach/Penalties
  7. Lending in Russia
    1. Lending documents and governing law
    2. Jurisdiction
    3. International finance transactions and repatriation requirements
    4. Security interests
    5. Recognition of security trusts
    6. Syndicated loans
    7. Enforcement
    8. Suretyships and guarantees
    9. Bankruptcy considerations
    10. Other lending related issues
  8. Employment and migration
    1. Formalising the employment relationship
    2. Managing employment relationships
    3. Terminating an employment agreement
    4. Specifics of employing foreign nationals
  9. Personal data protection
    1. General approach
    2. Scope of the Data Protection Law
    3. Liability
    4. Right to be forgotten
  10. Intellectual property
    1. General approach
    2. Contractual aspects of intellectual property rights
    3. Rights over the results of intellectual activity
    4. Company names, trade names, trademarks and appellations of origin
    5. Intellectual property rights infringements
    6. IP Court
  11. Advertising issues
    1. General approach
    2. Scope of application of the Advertising Law
    3. Violations of the Advertising Law
    4. Liability
  12. Anti-corruption and compliance
    1. General approach
    2. Legal framework
    3. Compliance requirements for companies
    4. Concept of corruption in Russian law
    5. Possible targets of bribery
    6. Liability and penalties for corruption
    7. Example of sector-specific anti-corruption measures
  13. Real estate and construction
    1. Rights to real estate
    2. Real estate transactions
    3. Resolution of real estate disputes
    4. Planning and construction issues
  14. Corporate bankruptcy
    1. Insolvency criteria
    2. Stages of bankruptcy proceedings
  15. Import substitution and production localisation in Russia
    1. Measures affecting goods importation and current import substitution legislation
    2. Localisation incentives
    3. Sector-specific impact of import restrictions and localisation requirements
  16. Banking sector
    1. Legislative and regulatory framework
    2. Licensing and operations
    3. Deposit insurance
    4. The anti-money laundering law
    5. Bank secrecy
    6. FATCA and CRS
  17. Environment, energy efficiency and renewables
    1. Environment
    2. Energy efficiency
    3. Renewables
  18. Infrastructure and public private partnerships
    1. General approach
    2. Key PPP legislation
    3. Russian PPP environment
    4. Financing
    5. Legal issues
    6. Prospects for infrastructure projects
  19. Oil & gas
    1. Legislative framework
    2. Ownership and licensing
    3. Restrictions on foreign investors
    4. Licences
    5. PSAs

Banking sector

The Russian banking industry is still characterised by a large number of credit institutions (836 as of 1 January 2020) and by a high level of concentration of capital.

In 2018-2019 the Central Bank of Russia (the “CBR”) continued its policy of reducing the number of credit institutions, aiming for their consolidation and the closer supervision of their activities in the current economic climate. Consequently, a noticeable number of banking licences were revoked in the last two years.

As of 1 January 2020, 60.3% of the banking sector’s total assets were held by the top five Russian banks1. State-owned banks2 continue to play a significant role in the stabilisation and development of the Russian banking sector.

[1] As of 1 January 2020, the top five Russian banks in terms of net assets are Sberbank (RUB 28.9bn, i.e. EUR 412.9m); VTB (RUB 14.3bn, i.e. EUR 204.3m); Gazprombank (RUB 6.5bn, i.e. EUR 92.9m); National Clearing Centre Bank (RUB 4bn, i.e. EUR 57.2m); and Alfa-Bank (RUB 3.8bn, i.e. EUR 54.3m); www.banki.ru/banks/ratings/ (all conversions are based on a notional rate of RUB 70 = EUR 1, as used for convenience throughout this guide).

[2] Such as Sberbank, VTB, Gazprombank, etc.

Legislative and regulatory framework
Licensing and operations
Deposit insurance
The anti-money laundering law
Bank secrecy
FATCA and CRS

Expertise

Banking & Finance

FATCA and CRS

Critical provisions of FATCA (i.e. the US Foreign Account Tax Compliance Act 2010, which came into force on 1 July 2014) apply extraterritorially and in order to counteract tax evasion require foreign financial institutions to report to the US Internal Revenue Service (the “IRS”) information on their clients who have US tax residency status.

In the absence of an intergovernmental agreement on a FATCA compliance mechanism between the US and Russian Governments1 and but for the adoption of Federal Law No. 173-FZ2 regulating how Russian financial institutions can report to foreign (in particular US) tax authorities, these institutions (or more specifically, their officials), would have faced administrative sanctions and criminal charges for breaching Russian bank secrecy legislation following any transfer of data to the IRS. This law was, to an extent, to the relief of Russian financial institutions, but also imposed certain new reporting obligations on their officials, including an obligation on them to disclose to the Russian tax authorities that a client is a foreign taxpayer.

Russia also takes part in the OECD’s Common Reporting Standard (the “CRS”) which provides for automatic exchange of taxpayer information between the tax authorities of the participating countries. This means that (i) Russian financial institutions (including banks) are obliged to disclose information on their clients who are tax residents of other CRS participating countries to the Russian tax authorities; and (ii) the Russian tax authorities will engage in further exchange. Russia started to exchange financial information in September 2018. The Russian legal framework for an automatic exchange mechanism is now being developed3. According to the OECD automatic exchange portal, as of February 2020, Russia intends to exchange taxpayer information with 68 countries, while 95 countries confirmed that they will provide information on Russian taxpayers to the Russian tax authorities.

“Acquisitions in the banking sector are subject to specific banking and anti-monopoly clearance rules.”

[1] A FATCA compliance mechanism was discussed between the US and Russian Governments in early 2014. However, the negotiations of an intergovernmental agreement which would allow Russian financial institutions to comply with extraterritorial FATCA requirements have been suspended. Back ↑

[2] “On the Peculiarities of Financial Transactions with Foreign Citizens and Legal Entities and Amendments to the Code on Administrative Offences” dated 28 June 2014. Back ↑

[3] The law on the implementation of CRS requirements into Russian legislation was adopted in November 2017; the Resolution of the Government No. 693 “On the Implementation of the International Automatic Exchange of Financial Information with the Competent Authorities of Foreign States (Territories)” dated 16 June 2018 provides for the procedural details of the automatic exchange mechanism. Back ↑

Key contacts

Expertise

Banking & Finance