BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/14
Russian citizens, with the exception of government ministers, elected representatives and government officials, have the right to maintain bank accounts and own property abroad. However, an individual can only take up to $10,000 at a time out of the country without having to declare it. In certain instances, payments into offshore bank accounts have to be made via a Russian bank. Violation of these rules carry a fine.
The draft amnesty law includes guarantees of full confidentiality of declarant information and that all information provided will not be shared with other officials or used as a basis for pursuing criminal charges.
Declarants need not reveal the origins of their foreign-held assets. However, if the asset is subject to taxation and taxes have never been paid on it, the tax debt must be settled. The amount of such taxes will be specified in a later decree. The amnesty does not require repatriation of assets to Russia unless they are held in a tax haven.
The amnesty will allow private individuals to gain legal status for their foreign holdings held by other, nominal owners. It is quite common for Russians to use such an arrangement for their assets abroad.
Another decree will be issued to set the scope of the amnesty. It will specify whether the amnesty also covers other types of unauthorised wealth beyond mere tax avoidance such as assets related to money laundering or other criminal activity.
In drafting the new law, Russian officials have worked with the Paris-based intergovernmental Financial Action Task Force (FATF) on money laundering and other financial crimes. The watchdog group has already expressed concerns that the design of the new law may lack sufficient transparency. FATF recommendations require that officials share all information related to money laundering or the financing of terrorism. If the amnesty law fails to comply with FATF principles, Russia could be blacklisted for its insufficient efforts at preventing money laundering.