The problem of interaction between Russian banks and foreign banks-counterparties covered in the correspondence of the Association of regional banks “Russia” (ASROC) and the legal Department of the Bank of Russia published ACROSS.
As indicated in the correspondence, according to the requirements of the Ministry of Finance foreign banks must be registered with the tax authority at the place of registration of the Russian Bank counterparty (in which foreign banks open accounts). This provision was introduced by Ministry of Finance order (No. 117н) in 2010 and any problems are caused.
The difficulties as follows from the correspondence that started this year because of the started tax service reform based on Moscow banks. “From 01 Jan 2017 Bank of Moscow transferred from the tax Inspectorate No. 50 (specializing in financial institutions, abolished. — ) different tax inspections of Moscow (at the place of their physical location. — ) that obliges foreign banks to establish correspondent relations (opening of a Bank accounts in another. — ) have to register in tax inspections of Moscow, is given in the correspondence description of the problem. — It inhibits the process of opening correspondent accounts and leads to additional costs for banks-non-residents (registered abroad, we are not talking about was the Russian “daughter” of foreign banks. — ) “.
According to surveyed bankers, the situation is complicated by the fact that still remains unclear to register with the Inspectorate at the place of registration of the Russian Bank counterparty Bank non-resident need only when you open new accounts in the Moscow banks (e.g., Bank, which was not previously korotory, or when opening accounts in the new currency the existing Russian partner banks) or re-registration tax in General, necessary for the continuation of existing relationships with Russian banks.
The second option is the worst. It means that if the Bank-nonresident the accounts have been opened in ten Moscow banks, which are now registered in ten different Moscow inspections instead of one, as before, that foreign credit institutions have to prepare ten sets of documents for registration in ten different Metropolitan inspections, indicate the bankers.
“In this situation every Bank does so at their own risk, — said the banker from the Bank top 100, asked about anonymity. Someone suspends correspondent relations until the reset of the foreign Bank on account of the necessary inspection, someone continues to make payments without registration, considering that the problem only affects opening of new accounts.”
In any case, the source continues , the consequence is the occurrence of difficulties in servicing banks for foreign trade contracts. Direct correspondent relations between Russian and foreign banks needed to speed up calculations on them (the presence of the “daughters” in this case does not help). Now due to the tax reform, high risk, international payments, on the contrary, slow down. “Without opening direct accounts to non-resident banks foreign currency payments have to go through intermediary banks who, because of tightened compliance measures can detain and return payment at its discretion”, the source says .
As follows from the correspondence of the bankers and the Central Bank, the question “does the Bank together with the Finance Ministry to streamline the procedure” the Central Bank has forwarded to the relevant Department of the Ministry of Finance. “The answer to the said appeal is not received,” — stated the Central Bank.
Photo: Ekaterina Kuzmina /
The scale of the problem
According to the Bank of Russia, in Moscow on 1 April, there were more than half of all Russian operating credit institutions: 308 of 607 total in Russia. It is their, and therefore their foreign counterparty banks and raised the tax reform.
requested banks of Moscow of the top-40 in the presence of problems with opening correspondent accounts, but no official answer was no: the banks do not want to spoil relations with tax authorities. In the result, officially in response to a query about the problem said Absolut Bank, but only in General terms: “the Range of issues that arise in the interaction of banks, non-residents with tax authorities, known to us, although he has not touched. We can represent its magnitude, only by relying on the experience associated with own transition and the transition of our customers-residents,” — said the press service of the Absolut Bank. Two of the Bank in their official responses to the request evaded a direct answer to the question about the scale of the problem, saying that the opening of correspondent accounts to foreign banks is not their core business. The others did not respond to a request .
But unofficially, the bankers agreed to describe the problem.
“Almost all Respondent banks, both existing and potential receiving complaints of “unfeasible” package of documents required for opening of correspondent accounts in Russian banks”, — said the banker from the Bank included in the top 50. In accordance with Ministry of Finance order No. 117н, for statement on the account in tax body of the foreign Bank must submit application for registration, a certificate from the tax authorities on registration as a taxpayer, constituent documents, an extract from the register of foreign legal entities or other equivalent legal document confirming the legal status of a foreign founder. “Started by the tax authorities in Moscow reforms for banks, non-residents added additional difficulties in connection with the preparation, legalization and translation into Russian language additional package of documents for registration in multiple inspections,” confirms a representative of another large Bank.
The reason tax reform in Moscow was not well understood even by Russian bankers. In the conversation they suggested that 50-I the inspection was abolished due to the reduction in the number of supervised financial organizations in her clearing of the Central Bank’s financial market from dubious and unstable players.
The geography of complexity
The problem hypothetically affects all banks-non-residents from any countries, however, the greatest difficulty, paradoxically, arise mainly from banks from friendly Russia (in the context of sanctions) countries, indicate the bankers: according to them, this is about banks from Latin America, Asia, the Middle East and even the CIS.
Sanctions against Russia were introduced in March 2014 in connection with the annexation of Crimea and conflict in Eastern Ukraine and later repeatedly expanded. The initiator of the restrictive political and economic measures aimed at the international isolation of Russia became the U.S. government subsequently imposed sanctions and the EU. Later they were supported by the state “Big seven” and some other countries that are partners of the United States and the EU. According to the Federal Customs service in 2016 on the foreign trade relations of Russia and the largest countries are China (with the total share in turnover — 12%), Germany (8,7%), Netherlands (8.4%), Italy (5,8%) and Belarus (4,6%).
“The process of collecting necessary documents from the banks from the CIS countries — a long, not all of them are somehow satisfied with the tax, you have to redo it,” — said one of the sources . “And the opening of accounts, banks from some countries Asia, Middle East and Latin America may take many months or even years, as treatment to the local governments for the legalization of needs and further organization certified translation into the Russian language can be extremely difficult, due to local specifics, adds another source . The banks of these geographies that previously stood on the account in FNS Russia and sighed with relief that the procedure is finally complete when a new account is opened in Russian banks were forced again to go through all sorts of difficulties of legalization and to incur necessary expenses”.
Photo: Jasper Juinen / Bloomberg
However, sometimes suffer, and the bankers of sanctions. One of the sources, the famous case of the Dutch SNS Bank. Due to the lack of registration in the same tax as his usual Russian Bank counterparty, he was forced to spend the funds through intermediary banks that were slow and expensive process. According to one banker, the delay in this case can be from one day or more, depending on the adopted policy in the Bank verification of documents, overheads €25-35 for each payment”. In the SNS Bank did not comment on the situation.
The legal aspect
The problems arise from a number of banks from these countries, according to lawyers, can be explained by the fact that some of them (e.g. China, except the two special administrative regions (Hong Kong and Macau) has not joined “the Hague Convention abolishing the requirement of legalization for foreign public documents of 5 October 1961” (the Hague Convention). Convention establishes a special sign (stamp), stamped on official documents created in one state and be transferred to another state, which replaces the procedure of legalization in the Consulate apostille, lawyers explain. The documents certified by apostille are accepted without further certification in all other member — countries of the Convention. At the moment, 81 countries have joined the Hague Convention, including Russia.
“If a country Bank non-resident is party to the Hague Convention, legalization of documents for statement on the account in any government body of Russia is faster. The apostille can be issued from any notary public or directly through the Ministry of justice in the country of the foreign Bank”, — says partner of the law office A2 Mikhail Alexandrov.
However, the apostille depends on the speed of work of state bodies in the country. The procedure can last from several days to two to three weeks max, says the lawyer.
“If the country Bank which wants to open a correspondent account, is not a party to the Hague Convention, the procedure for registration and legalization of documents may be delayed for a much longer period than two or three weeks, — continues Alexander. — First, the Bank needs to bring the paperwork to the Russian Consulate. Employees of the Consulate requesting confirmation about the correctness of the executed documents to the Central Bank of the country concerned, and only then can deal with the legalization, translation and issuance of documents”. This whole procedure can take months, he warns.
From non-resident banks from CIS countries, according to lawyers, the situation is inexplicable. Russia and the CIS is the agreement on mutual recognition of documents, they indicate. “According to him, a document issued and certified by, for example, the Belarusian notary in the Russian language is accepted in Russia without any further proving his translation or evidence,” says Mikhail Alexandrov. In practice, however, the agreement does not always work. Sources pointed to several banks of Uzbekistan and Belarus, who are faced with the problem of legalization of documents in Russia. However, to comment on the situation, these banks did not want to.
Cause of problems can be the absence of specialized inspection experience of acceptance and verification of such documents, indicate the bankers. “If Inspectorate No. 50 that was familiar to established process, for other inspections, which translated into Russian banks, this process is new and needs time to debug,” says one of the interlocutors . One banker indicates that difficulties in communicating with the tax authorities of the specialized inspections occur even in the Russian banks: “what here to speak about foreign players.” “Tax inspections, where redistributed Moscow banks, are not accustomed to this procedure and inhibit the process due to operational difficulties” — according to senior associate Herbert Smith Freehills Sergey Eremin.
What to do
The consequences of the situation, if not addressed can be global, bankers warn. “Naturally, such an approach does not stimulate the development of correspondent relations with Russian banks and may delay settlement services contracts with Russian customers and foreign contractors for a long time,” expressed a common point of view, one of the interlocutors .
“A long statement on the account in tax, delays in the design and maintenance of contracts involve additional costs,” adds chief economist, Eurasian Development Bank Yaroslav Lissovolik. However, since re-registration is a one-off, these costs will be fixed and will affect the intensity and structure of trade flows only in the short term, then the situation is normal, he said.
However, bankers consider it necessary to take action and even made suggestions. “In terms of sanctions and targeting the development of correspondent relations with non-resident banks of CIS and SCO makes sense to make the tax registration of banks on the basis of the documents submitted only in one of the inspections, and arrange to transfer the required information between the inspections,” says one of the interlocutors . “The FTS has a modern IT-technologies, and it may be worthwhile to consider simplifying the procedure for foreign banks (for example, personal accounts on the website, by analogy with the VAT office the Internet-companies) or reducing the number of documents that foreign banks provide for re-registration”, — added in the other major lending institutions.
Specialized agencies, to which comments were addressed , the answers abstained. In TSB on a given issue sent to the Federal tax service (FTS) and the Ministry of Finance. In both departments for several days and did not respond to a request .