Putin signs law to help Russia "resolve difficulties" in international payments

Russian President Vladimir Putin signed a law on August 8 that allows foreign banks to open branches in Russia but also imposes some restrictions on their activities. The text of the law was published on the official legal information portal.

The aim is to facilitate the development of international payment systems and attract foreign investment, the explanatory note said.

The activities of foreign bank branches will be aimed precisely at this goal. Therefore, the limitation is that these branches cannot perform some of the same transactions as regular banks, such as opening deposit accounts for individuals and companies, precious metals accounts, participating in the trust management of currencies and other assets.

Foreign banks will be allowed to operate on the securities market through a branch established in Russia. Each bank will be allowed to establish only one branch. The law also sets requirements for the professional qualifications and business reputation of bank officials.

By law, a branch of a foreign bank must establish a security deposit of at least 1 billion rubles ($11 million) to ensure the performance of contractual obligations.

If the branch fails to comply with the Central Bank of Russia (CBR) requirements to eliminate violations of anti-money laundering laws within the specified time frame or such violations threaten the interests of creditors, the regulator may impose a fine of up to 1% of the deposit, but not less than 1 million rubles ($11,300).

At the same time, the Central Bank has the right to appoint its representatives at branches of foreign banks, who will be able to receive documents and information about its activities, request data on transactions and operations.

The law will come into effect on September 1, 2024. Currently, foreign banks can only open subsidiaries or representative offices in Russia, not branches.

Russia's Finance Ministry said it hopes the law will ease problems associated with cross-border agreements.

International agreements have become problematic for Moscow after Western sanctions – imposed over the conflict in Ukraine – blocked major Russian banks from accessing the SWIFT global payments system.

Minh Duc (According to TASS, SwissInfo)