FOREIGN CURRENCY CONTROL IN CASE OF FREE MOVEMENT OF CAPITAL

Abstract

The current practice of foreign currency control in Russia is based on the mechanisms that were formed during the period of the Soviet administrative and command economy. The approaches applied in Russia to foreign currency regulation and foreign currency control (repatriation requirements, closed list of operations for crediting funds to foreign accounts) create barriers for the Russian business and citizens, significantly complicating the procedure for their foreign economic activity. At the same time, the existing restrictions, in conditions when the requirements for the sale of a part of foreign currency earnings and other restrictions on the movement of capital are not applied, do not ensure the achievement of macroeconomic goals, which are laid down in the preamble of the act “On foreign currency regulation and foreign currency control”. The foreign currency act in Russia does not currently ensure the achievement of the goals for which it was adopted. In practice, the act solves the tax objectives and the tasks of combating the legalization of criminal revenue. Developed countries and members of the Organization for economic cooperation and development (OECD) do not use similar mechanisms to control the movement of funds. At the same time, foreign countries are actively developing instruments to control cross-border cash flows within the framework of legislation on combating money laundering and financing of terrorism, as well as in the framework of improving the mechanisms of international exchange of financial information for tax purposes. The authors propose a reform of the current foreign currency regulation aimed at the abolition of currency restrictions and the development of alternative mechanisms for controlling the cross-border movement of funds by improving the international exchange of tax information, including automatic one, as well as improving the effectiveness of measures to combat money laundering in international trade.