Foreign citizens who obtain a Russian residence permit will now have the ability to “unfreeze” their funds held in the country and sell Russian securities, according to a letter from the central bank reported by business newspaper RBK.
The document, which can also be found on the website of the National Association of Stock Market Members, states that “foreign citizens permanently living in the Russian Federation on a residence permit are not considered as unfriendly non-residents” and are therefore exempt from certain restrictions.
Last year, Russia implemented a procedure that mandated all payments to citizens of “unfriendly” countries, such as loan repayments, coupon payments, and dividends, to be made in rubles into special “C-type” custody accounts. These accounts prohibit the withdrawal of funds without government authorization and can only be used for essential payments, like fines and taxes. As US-based law firm Morgan Lewis noted, the number of authorized transactions with these accounts is extremely limited, effectively blocking the funds.
However, the central bank’s clarification means that foreign citizens with a Russian residence permit can now freely manage payments received from Russian entities and are permitted to transfer up to $1 million abroad per month, according to experts quoted by RBK.
The Bank of Russia also stated that payments on securities can now be made without the use of C-type accounts. This development provides further flexibility and freedom for foreign citizens residing in the country to conduct financial transactions.
Deputy Finance Minister Aleksey Moiseev revealed in April that the funds kept in C-type accounts amount to hundreds of billions of dollars, a figure comparable to the amount of Russian assets frozen abroad. This suggests that the recent clarification from the central bank could have significant implications for both individuals and the overall financial landscape.
The ability for foreign citizens with a Russian residence permit to manage their funds and engage in financial activities without restrictions not only supports their personal financial goals but also promotes economic growth in the country. By allowing them to freely use their funds, contribute to the local economy, and engage in international financial transactions, Russia positions itself as an attractive destination for foreign talent and investment.
As a result, the recent development could have positive implications for Russia’s business and economic sectors. The removal of restrictions on foreign citizens residing in the country will likely encourage more individuals to consider obtaining a Russian residence permit and potentially invest in Russian securities. This influx of investment has the potential to drive economic growth and foster a favorable business environment.
Overall, the central bank’s clarification regarding the treatment of foreign citizens with a Russian residence permit marks a significant development in Russia’s financial landscape. By eliminating restrictions and providing greater flexibility, this move not only benefits individuals but also supports the country’s economic goals. As foreign citizens become empowered to freely manage their funds and engage in financial activities, it is expected that Russia’s attractiveness as a destination for foreign talent and investment will increase.