Obtaining a residence permit will cancel out restrictions placed on citizens of “unfriendly” countries

Foreign citizens who obtain a Russian residence permit will be able to “unfreeze” their funds held in the country and sell Russian securities, business newspaper RBK reported this week, citing a letter from the central bank.

According to the document, which is also available on the website of the National Association of Stock Market Members, “foreign citizens permanently living in the Russian Federation on a residence permit are not considered as unfriendly non-residents” and are effectively exempt from restrictions.

Last year, Russia enacted a procedure that requires all payments to citizens of “unfriendly” countries, such as loan repayments, coupon payments, and dividends, to be made in rubles into special “C-type” custody accounts.

Money cannot be withdrawn from these accounts without government authorization and can only be used for mandatory payments such as fines and taxes. According to US-based law firm Morgan Lewis, the funds are effectively blocked as the number of authorized transactions is “extremely limited.” 

The central bank’s clarification means that a foreign citizen with a Russian residence permit can freely manage payments received from Russian entities and can transfer up to $1 million abroad per month, RBK explained, quoting experts.

READ MORE: Major Swiss bank closing accounts of Russians

Payments on securities can also be made without the use of C-type accounts, the Bank of Russia added.

Deputy Finance Minister Aleksey Moiseev said in April that the funds kept in C-type accounts amount to hundreds of billions of dollars, comparable to the amount of Russian assets frozen abroad.

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