Extension of terms of foreign exchange control will replenish the budget

The Ministry of Finance of the RF has put forward an initiative to extend the term of limitation for currency offense from 1 up to 3 years. If the norm will be accepted at the legislative level, it will allow to replenish the budget by more than 220 bln RUB annually at the cost of imposed penal sanctions (about 1,6% of revenue side of the budget as of the year 2014).

Today the penalties for illegal exchange transactions make approximately 75-100% of their size. However, taking into account that it is possible to hold somebody accountable for breaching the legislation only during one year from the moment of its committing, the budget doesn’t receive an essential part of compensation. Whole proceeding procedure is longstanding on its own: it is necessary to inform a violator about place and time of hearing of a case, serve a summons, join him/her to the case etc. As the result, in 2012 the violators shirked responsibilities because of the extension of the term of limitation almost in every second case.

The majority of detected violations in monetary terms is connected with fraudulent import. Parties transfer funds to non-residents using fraudulent documents, in most cases - false delivery notes, executed in the states-members of Customs Union.

The violation can occur also through contractor’s fault, for example, a buyer delays cash transfer, and for placing of currency gain out-of-time a resident faces a penalty. The extension of the term of limitation should relieve this problem partially, because to delay payment for 3 years seems to be improbable. And in case such episodes will happen, then the reputational component as an unreliable partner will play the defining role for the market. Beyond that, an extended term will allow to conduct deeper investigations and find out the ultimate beneficiaries in a transaction.