Russia Update: New Customs Law Planned to Require Documentation of Cash at Border

Russian customs agents will now require documentation of cash taken out of or brought into Russia under a new draft regulation planned for the Customs Code, RBC.ru reported.

The new law will first affect those “taking out suitcases of dollars,” Sergei Shklyayev, an official of the Federal Customs Service (FTS) told Rossiyskaya Gazeta.

The Eurasian Economic Commission will set the sum above which citizens will be required to declare where they got the money. The figure of $10,000 is currently being discussed. US Customs regulations, for example, require declaration of $10,000 or more.

Said Shklyayev (translation by The Interpreter):

Customs agents see more than a million in dollar equivalents fairly often. This year, there were seven cases of import and 51 cases of export of hard currency worth more than US $1 million. Twice, there were people who brought in and took out more than $5 million.

[…]

Not every passenger with a suitcase is its owner. It happens that he is a hired courier and is carrying someone else’s money. We call them “cash couriers”; they themselves often don’t have a steady source of income and are not employed anywhere. Such transport of cash is related to money-laundering of criminal revenue, with the financing of terrorism, and with illegal foreign trade operations. That causes particular alarm now.

The regulation could close off a means for many Russians to survive, not just big business people, by opening up a path for arbitrary decisions and bribes, although Shklyayev said no restrictions are planned for the amounts if they are reported.

“We have no basis under the law for demanding proof of the legality of a suitcase of bills,” he said.

Recently, an adviser to Open Russia was stopped by police on election day when he was carrying 2 million rubles in cash (at that time worth $29,500) evidently related to paying the expenses of independent election observers. Police confiscated the cash saying they needed to check if it was counterfeit and have not returned it.

Shklyayev says that legal transactions will always have proper paperwork. This year, the FTS has opened up 137 criminal cases on unlawful transport of cash abroad, but only one or two of them reached the stage of trial. Those accused simply postponed delivery dates to account for the cash, Shklyayev complained, saying that the powers of customs agents and customs law itself are insufficient to deal with contraband deals. He hopes for changes to the law to enable Russian state agencies such as the tax service to exchange information about persons with large sums of cash.

He said unscrupulous businesses send cash abroad for purchase of items that are never delivered, or deliberately inflate the cost of items such as medical equipment that are delivered. Customs authorities have been unable to stop these transactions, he complained. Under amendments to the code, the FTS would be able to file complaints when they see such imports.

Rossiyskaya Gazeta says capital flight so far this year through the month of September was $45 billion, according to preliminary data from the Central Bank. By contrast last year, it was $155 billion.

Capital flight in 2014 doubled from the previous year to $151.5 billion, according to Business Insider in January — estimates can differ due to exchange rate fluctuations. In any event, it seems the figure for dollar outflow is significantly lower this year, possibly as Russians hang on to dollars to use for expenses within Russian given that the ruble crash has lost a third of their incomes and savings.

— Catherine A. Fitzpatrick