Exclusive: Moscow establishes new controls on foreigners trading Russian goods

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Exclusive: Moscow establishes new controls on foreigners trading Russian goods

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Steam rises from the chimneys of a heating floor on the skyline of central Moscow, Russia, November 23, 2020. REUTERS / Maxim Shemetov / file photos

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  • Russia temporarily stopped selling goods to foreigners
  • Foreigners now need to provide details before trading
  • Applications for authorization must be submitted in the Russian language

LONDON / NEW YORK, March 17 (Reuters) – Russia has set strict rules for foreigners seeking permits to buy and sell Russian and real estate securities, a Citigroup (CN) client memo showed, as new details emerge. state investment controls in response to Western sanctions.

Russia temporarily blocked foreigners from unloading Russian assets this month, saying it wanted to make sure decisions were considered and not guided by political pressure, as sanctions escalated after Moscow invaded Ukraine. to know more

Funds with tens of billions of dollars exposure to Russia are awaiting details on the new restrictions they will face as they try to offload assets.

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The invasion, which Moscow calls a “special military operation,” triggered an exodus of international corporations and largely cut the Russian economy off from the rest of the world.

Russian authorities this month published Decree 81 which states that any transaction between Russians and foreign counterparties requires the authorization of the Russian Government Commission for the Control of Foreign Investments. to know more

Indeed, this meant that foreign investors, who had acquired Russian stocks and bonds without restriction, were stuck with those holdings as the economy staggered from an attractive oil-rich investment destination to a financial pariah.

Russia has now finalized the details of the application process for foreigners seeking to trade goods and who will restrict trade to those permits granted, the Citigroup note said.

The process requires foreign investors wishing to buy and sell Russian assets to provide detailed information in advance in order to obtain a permit to operate.

“The Russian authorities have announced the order for obtaining permits to carry out the operations determined by decree 81. A body authorized to take decisions on the issuing of permits has been established”, the note reads.

It says an application and related documents must be submitted to the Russian finance ministry, in Russian language, containing “information on the purpose, subject, content and essential conditions of the transaction.”

Applicants must also disclose all information on beneficiaries and beneficial owners, the note said.

“It’s a control mechanism,” a banking source said of the rules. “This is just a mechanism to control which entities can trade foreign currencies and it will not be companies from countries hostile to leave the country.”

Citigroup declined to comment beyond confirming the memo’s authenticity.

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Additional reporting by Megan Davies; edited by John O’Donnell and Edmund Blair

Our Standards: Thomson Reuters Trust Principles.

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