Union of the Federal Tax Service and the Ministry of Internal Affairs
As RBC reports, the central office of the Federal Tax Service circulated a directive to regional authorities in March to coordinate with police on monitoring violations tied to buying and selling foreign currency outside the formal banking system. The document states that, under current conditions, currency trading that bypasses banks threatens both the Russian ruble and the stability of the domestic exchange market.
RBC noted that recent instances of illegal currency purchasing and selling prompted tax authorities to sharpen their focus on detecting such violations, leveraging the capabilities of internal affairs agencies. The ministry also emphasized that the service remains actively engaged in monitoring these activities in collaboration with law enforcement partners.
Earlier in March, the Federal Tax Service announced a suspension of currency compliance audits to reduce the administrative burden on businesses and individuals. The updated mandate clarifies that currency speculation by individuals is not covered by this moratorium, and inspections related to breaches of currency legislation conducted outside authorized banking channels should continue as normal.
The article also clarified that while the Federal Tax Service has oversight of compliance with currency laws, its remit does not extend to conducting operational measures. Consequently, leaders within the service instructed regional offices to cooperate with the Ministry of Internal Affairs.
Dating back to a 2010 agreement, joint work between the departments has aimed to detect and suppress illegal activities by tax-evading entities and individuals, including those engaging in illicit business practices.
Restriction on printing foreign currency
A notice posted on the Central Bank of Russia’s website on March 9 described a temporary change in procedures for withdrawing funds from foreign currency deposits or accounts until September 9, 2022. The bank stated that client funds in foreign currency accounts are recorded in the currency of the deposit, with cash withdrawals limited to 10,000 USD; remaining funds would be converted to rubles at the market rate on the date of withdrawal.
According to the Central Bank, roughly 90% of foreign currency accounts hold balances not exceeding 10,000 USD, meaning most holders could access their funds in cash in full. During the temporary regime, currency would be issued in USD regardless of the account’s original currency. Other currencies would be converted to USD at the market rate on the issue date, and cash could be obtained from bank tellers.
Citizens were still allowed to maintain funds in foreign currency deposits or accounts, with balances remaining recorded in the original currency of opening. Deposit terms and interest calculations were to continue in the same currency as the account. New foreign currency accounts could be opened, but cash withdrawals would occur in rubles at the market rate on the date of issue, and banks would not sell cash to customers under the temporary regime. Currency exchanges for rubles could be performed at any time and in any amount, subject to the market rate on the day of exchange.
The temporary regime followed measures in response to broader sanctions developments, including the European Union’s restriction on euro imports and parallel restrictions on dollar imports into the country. The Federal Tax Service noted that sharp rises in official exchange rates for major currencies and limits on currency sales had driven more people to engage in currency exchanges outside authorized banks. It warned that selling foreign currency outside formal channels is an administrative offense, with penalties outlined in the Administrative Offenses Code of the Russian Federation.
RIA Novosti reported that penalties for individuals, entrepreneurs, and legal entities could range from 75% to 100% of the exchanged amount, while officials might face fines from 20,000 to 30,000 rubles.
Speculators on Telegram
Reports from socialbites.ca identified several Telegram channels where people buy currency informally. Users can select their city, open conversations where private sellers post offers, and some buyers post requests as well. Channel managers promote quick deals with phrases like “Best rates for your money!” covering Moscow and many other cities, inviting users to invite friends and partners.
Trading often occurs within private chats. For example, one member offered to sell 8,000 euros at a rate of 110 rubles, while a buyer expressed willingness to purchase at 105 rubles. In St. Petersburg, a 5,000-euro sale at 95 rubles was discussed, and a user named Yevgeny offered to exchange a thousand dollars at 102 rubles and a thousand euros at 112 rubles. In Khimki, some offers were listed at 115 rubles per euro, with similar discussions about dollars. Market data from the Moscow Stock Exchange showed substantially lower rates for the same currencies, underscoring the divergence between informal exchanges and official markets.
Overall, the situation illustrated how informal channels could supplement or circumvent formal banking mechanisms, highlighting the ongoing tension between regulatory oversight and market demand for foreign currency access.