Geopolitical shifts, trade restrictions, widespread sanctions, currency transaction limits and new legislation have significantly affected the international operations of Russian businesses.

Cooperation between local companies and foreign businesses is moving to the next stage. New markets are being explored, as Russian goods, services and technologies remain strategically important to foreign partners. However, in today's environment, proper risk assessment must be applied while seeking and checking overseas partners. Before entering into an agreement, it is necessary to verify the bona fide of the potential partner, check the foreign trade restrictions, examine the export and import restrictions legislation of both parties to the agreement, make sure about the absence or presence of foreign exchange limits and other aspects requires a comprehensive checking.

The trade turnover is entering a new orbit. Moving to the East

According to Ruslan Davydov, First Deputy Head of the Federal Customs Service (FCS), Russia's trade surplus for January-September was a record USD 251 billion, including export of USD 431 billion and import of USD 180 billion, compared to USD 130,3 billion for the same period in 2021. Thus, the surplus grew by 93% over the reporting period. The FCS also predicts a record increase in trade with China and Turkey, as well as a significant drop in trade with the European Union.

Previously, we drew attention to the increased interest in companies from China, India, the UAE, Turkey, Israel and the CIS as the Russian economy has been globally reoriented towards the East.

The FCS data confirms that the focus on the Eats, declared at the political level, is supported by domestic business. Cooperation with new partners in the Asian and CIS markets enables both the promotion of domestic products and services in foreign markets and the import of systemic goods and technologies that are not produced in Russia.

However, there are financial and legal risks involved in cooperating with foreign companies. To enter into safe and transparent transactions in the international arena, it is necessary to follow the rules of commercial risk assessment and understand the specifics of doing business in these regions.

Before cooperating with a foreign partner, it is important to conduct a comprehensive check of a potential counterparty and, in order to avoid various types of irregularities, to comply with the legal requirements of each contracting party's country.

The fresh investigation is prepared by the experts of the Information Agency Credinform in cooperation with an extensive network of local partners. The report complies with international standards and includes, inter alia, registration data, management, shareholders, types of activity, financial accounts, overall assessment of the company, including risk assessment, credit risk, maximum credit, if financial data is available. The experts of the Information Department additionally search for affiliates and subsidiaries in Russia, and verify participation in legal proceedings and enforcement proceedings in Russia.

Exchange control. Legislation of the countries participating in the contract and sanctions

Raw material prices are one of the most important criteria for exporters to cooperate with foreign companies. The prices of foreign suppliers are often linked to world quotations and are more attractive than those offered in the domestic market. In addition, expansion into foreign markets allows the organisation to increase its output and capitalisation, as well as to avoid losses caused by the suspension of production due to insufficient numbers of domestic customers. Increasing production and profits, is only possible with the diversification of sales markets.

The activity in the imported goods and services market is linked to the legalisation of Parallel imports. It becomes reality after the number of large corporations and brands have haltered trading in Russia, but their products remain in demand among domestic consumers. It is also important for importers to find better price offers abroad. However, low price and comfortable terms of cooperation do not mean that a potential business partner is reliable.

It should be noted that contracts with foreign partners might be subject to the exchange control. Import contracts valued at more than RUB 6 million and export contracts valued RUB 3 million and more should be registered. Such contracts shall be recorded at an authorised bank. However, global sanctions against the Russian financial sector may prevent payments on the deal. The company cannot accept payments in foreign currency to accounts opened with other banks if sanctions have been imposed on the bank where the company's foreign currency contract is registered.
Letter of the Bank of Russia No. 019-12-4/1210 of 28.02.2022.

When working with a foreign counterparty, it is important to comply with the laws of the country of each party to the contract. It is also worth paying special attention to the study of trade sanctions and export-import restrictions.

Russia has a number of bans on the export of certain types of goods as well as on imports:

• under the food embargo, import of certain types of agricultural products, raw materials, food products from countries that have adopted sanctions against Russia are prohibited
  Decree of the Government of the Russian Federation of 07.08.2014 No. 778;
• there is a temporary ban on the export of certain goods, including pharmaceutical products, engines and turbines, pumps, various industrial equipment, bearings, railway locomotives, etc.
  Decree No. 311-313 of the Government of the Russian Federation of 09.03.2022.

In addition to trade restrictions, there are sanctions against individuals and organizations. Russia has introduced Special Economic Measures against a number of legal entities and individuals, with whom transactions and any trade and economic activities are prohibited. The USA, EU countries, Japan, Britain, Canada, etc. also maintain lists of entities that are subject to export-import sanctions.

"Friendly" compliance

Geopolitical tensions between the Russian Federation and certain states have contributed to the adoption at the legislative level of specific features of cooperation with counterparties from "unfriendly" countries.

The list of such states currently includes 66 countries and territories. Among them: USA, UK, EU member states, Switzerland, Canada, Japan, Republic of Korea.

Since 02.03.2022 a special procedure for transactions with foreign persons from the list of "unfriendly" states was introduced (Presidential Decree No. 81 of 01.03.2022). Transactions requiring special procedures include:

• granting credits and loans to non-residents in rubles;
• granting loans to non-residents in foreign currency;
• purchase and sale of securities and real estate to non-residents;
• transferring money without opening a bank account using foreign payment services.

The mentioned transactions are allowed only with the consent of the Government Commission for the Control of Foreign Investment in the Russian Federation. To make transactions with securities, you need to obtain permission from the Bank of Russia.