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The widespread tightening of tax and currency legislation can deprive rich Russians of restful sleep. What risks should be remembered to keep your savings in an era of total transparency?

In recent years, wealthy Russians have encountered a number of problems in solving which the classic Private Banking and wealth management tools will no longer help them. It seems that a fundamentally different approach is now in demand – “the game of advance”, which will allow rich people to pass through these tests with dignity and without great losses while retaining all that they have earned with such difficulty over time.

It is necessary to honestly admit that Russia has never had favorable conditions for the preservation of capital – the state simply did not deal with this issue. But there were comfortable foreign jurisdictions that were viewed as a kind of reliable “safe” where you could “hide” your savings from prying eyes. Banks, investment companies, all sorts of intermediaries gladly met new customers from a large country of capitalism under construction.

It was possible to buy a vending business without any problems and “stock up” with real estate in Nice or London, New York or Berlin. This state of affairs suited everyone for many years, they got used to it. If we add to this a string of offshore companies for business, various holdings, and trusts, then we’ve got a kind of “designer” who allowed almost any rich person to build a personal protection system and not be afraid for the fate of his capital.

Global oversight

Everything began to change after the crisis of 2008, when the leading world powers, including Russia, agreed to start a fight with those who evaded paying taxes and thereby did significant damage to their countries. This was the first “call” to which few people listened and which led the world to drastic changes in the fight against “dirty” money.

Then the automatic exchange of information between the tax authorities of different countries was launched. Russia currently has treaties with 73 states and territories. This list includes, for example, the United Kingdom, France, Switzerland, Germany, Cyprus, and other jurisdictions.

The foreign financial institutions have also become harsher on the “Russian” money. The number of various documents that are now needed to open a bank account somewhere in Cyprus or in Switzerland just rolls over. And this is the case if you agree to talk at all.

All these years and his native state did not sleep. The amendments to the current legislation introduced on January 1, 2015, actually blocked for the Russians the possibility of normal investment and trust management through foreign banks. Thus, Russian capital owners have come under a double pressure: from both foreign financial institutions and the Federal Tax Service.

What to fear in the future

However, this is not all. New troubles are clearly visible on the horizon, which may soon fall on the heads of wealthy investors. It is better to prepare for them in advance. Here are some possible problems.

Law on “criminal” finance

Taken this year in the UK, it is very quickly gaining popularity all over the world. The idea is very simple: if your assets (houses, cars, jewelry) seem suspicious, then you may be obliged to present proof that all this wealth is provided by appropriate sources of income. Otherwise, everyone can confiscate.

Imagine that you have a beautiful apartment overlooking Hyde Park in central London, bought somewhere in 2012. Then no one asked where these millions of pounds came from, and it never occurred to you that such evidence of the “purity” of the money would ever be needed.

And now, please, you can ask all of this to be submitted to an English court, which will decide whether the real estate has been acquired with “clean” or “dirty” money. In the latter case, have to part with it. I do not think that even after that you will be left alone. If the problem was only in it! It is possible that such “miracles” may soon begin to happen in Italy, France, Germany, and other European countries.

Stricter requirements for sources of wealth abroad

If the law on “criminal” finance is selective in nature and is aimed, as a rule, at those or other “fragments” of the wealth of individuals, in the future punitive “actions” that have a massive and forced nature are possible.

We have already seen this by the example of a total check of Russian bank accounts and their mass closure. At same Cyprus, once the favorite place of Russians, now there are only 2% of customer accounts from Russia of their total number in local banks, and in the best years, according to expert estimates, it reached almost a quarter.

Now real estate may be next in line – the most vulnerable and painful area of Russian investments. There are a lot of options for the development of events. For example, all property bought by Russians in France or in Italy until 2016 for more than $ 500,000 may be retrospectively checked for the purity of sources of income. It is even difficult to predict the results of such “cleansing”.

Data analysis automatic exchange of information

The first swallows have already begun to arrive at the Federal Tax Service this fall. I believe that by the spring we can expect interesting results. For example, the simplest is to compare the total capital that a person holds abroad and his tax deductions for the past years.

Let me give you an example: citizen Petrov placed his savings in three European banks, each with an average of $ 2 million. He provided the same “certificates” to all financial institutions that it was money from selling a business and the corresponding taxes were paid to them in Russia.

It’s true! Now, the FTS receives information that our client stores $ 6 million abroad, and, of course, questions start to him, additional taxes, fines, and maybe even worse.

For this, after all, everything was started. If the banks themselves find out about this, then Mr. Petrov will simply be “asked to exit” and, possibly, his accounts will freeze.

The effects of capital amnesty

I do not exclude that in 2019 there may be “clarifying” questions to those people who took part in this amnesty. It is possible that the person got into the chain of an already open or new criminal case. Or it seemed to someone that he did not tell everything about his “sins” to the end. You never know … I generally think that an amnestied person in Russia receives a kind of stigma for his whole life, which can always be remembered as an opportunity. I would be infinitely happy if my opinion turns out to be wrong.

Tightening of currency regulation

The endless series of sanctions against Russia after the events of 2014 made this issue highly relevant. The threat of “switching off” state banks from the possibility of operating with US dollars is quite real, and if it is not implemented in November of this year, this does not mean that the risk has disappeared.

This can happen in the very near future, say, in January or May 2019. There is a high probability that Russia, for its part, will be forced under the most severe sanctions to take a series of unpopular measures. One of them may be the introduction of restrictions for citizens on storage and operations with foreign currency.

The problem of old sins

This is a real bomb, protection from which is very difficult to find. Everyone knows the example of a Russian oligarch who, when buying property on the Cote d’Azur, underestimated its value in order to win on taxes.

I have no doubt that this idea was thrown to him by a local lawyer, who at that time looked like a good fellow in the eyes of the Russian buyer and made good money on it. 10-15 years ago, so many did so, and the tax looked at it through their fingers, considering such a move as a perfectly legal prank.

However, times are changing, and now you need to answer for it. In theory, the same lawyer had to come to his client and warn him in advance about it. But, as a rule, neither a lawyer, nor an accountant, nor a financial or tax consultant track their old transactions, and all the “sins” accumulated over many years become available for investigation and punishment.

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