Russian State Duma has prohibited to transfer collected debt money to creditor’s non-Russian bank accounts

December 20, 2022, Russian Duma (lower chamber of Russian Parliament) has adopted a new bill No. 155721-8[1] amending a current version of Russian Federal Law on Enforcement Proceedings. According to the new bill, the money recovered through enforcement proceedings cannot be transferred to the creditor’s non-Russian bank accounts.

There are several options with regard to enforcement proceedings in Russian Law. First, if an Enforcement Order is presented to the debtor by the Enforcement Officers, the recovered funds are transferred firstly to the deposit account of Russian Federal Bailiff Service (RSPP), then to the creditor’s account. Should the creditor present an Enforcement Order to the debtor personally, the recovered funds are transferred directly to the creditor’s account.

Pursuant to the discussed bill, creditors without Russian bank account will not be able to recover funds due to them pursuant to a court order, unless it opens a Russian bank account.

Besides, under §7(б) of the bill No. 155721-8, banks shall be entitled to refuse the execution of an Enforcement Order if bank workers have a legitimate doubt that such transfer may be used for money laundering or terrorism funding.

The bill is retroactive: if, by the moment this bill becomes a law and comes into legal force, any Enforcement Order is already submitted for execution and the recovered funds are to be transferred to a non-Russian bank account, Russian Federal Bailiff Service (RSPP) has to immediately issue a freezing order on these funds. Bailiffs shall issue an unfreezing order only when they receive bank details of a Russian bank account from the creditor.

The bill is expected to be approved by the upper chamber of Russian Parliament and signed into law shortly.

[1] Bill No. 155721-8 on amendments in Federal Law on Enforcement Proceedings found at: https://sozd.duma.gov.ru/bill/155721-8.