Putin Calls for Extension of Amnesty Period For Returning Overseas Wealth to Russia
07 Dec 2015

Vladimir Putin has announced an extension to the amnesty begun earlier this year for Russians re-shoring assets. The amnesty will be granted to Russians who have illegally kept money in offshore jurisdictions, on the proviso that they either repatriate the assets or pay taxes on them. The law was first implemented on 1st July 2015 to encourage Russian businesses to return to Russia by relieving their assets and bank deposits from liability over tax avoidance, asset concealment and creating entities illegally.

Capital flight is a major issue for the state, with the Central Bank of Russia reporting $32.6 billion capital outflow during the first quarter of 2015 alone. The phenomenon follows considerable turmoil in the region, including Western sanctions against Russia following its military incursion into Ukraine. Tensions remain heightened in the international arena following the downing of a Russian plane by Turkey and Russia’s involvement in the ongoing conflict in Syria. These developments, coupled with the Rouble suffering as a result of falling oil prices, have resulted in significant economic difficulties for Russia over the last year.

The renewed calls for businesses to return to Russia come with the promise of a simplified  process for them to do so. The lack of due diligence required has led members of the AML community to argue that the effect of the amnesty will be to enable the movement of the proceeds of crime back to Russia. In fact, the funds are likely to be the proceeds of crime twice over: first because of tax evasion and capital controls in respect of which the amnesty was imposed; second because corruption remains a major issue in Russia and much of the money offshore is likely to be the direct or indirect proceeds of a crime.

However, in reality it may not matter too much: while the conditions of the amnesty are ostensibly favourable for Russian business owners,very few have taken up the opportunity – according to Russia’s Vedomosti business daily, only 200 applications to declare hidden assets have been made.

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