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Financial transactions that have been authorised and regulated, cannot be imported from other countries into Russia. The fact that there are companies established overseas that have been subject to regulation and authorization of activities locally does not mean they will receive automatic authorization in Russia. However, it is expected that in the future there will be a certain level of cross-border licensing between member countries of the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, and Russia).¹

A local legal status is essential for services that require licensing or registration. It applies to banking, insurance, brokerage, and stock market companies wishing to open operations on Russian territory. If transactions with Russian customers occur, it may end with the blocking of the offender's website in Russia. Certain industries also receive protection against foreign competition seeking to establish operations in the Russian market. A 50 percent quota on the total amount of foreign capital applies to insurance and banking companies, for instance. Besides this, there are no additional restrictions on foreign investment companies hoping to enter the financial technology market, as long as they are legally established and have a presence in Russia. There are also no other requirements forcing these investors to establish partnerships with local companies.¹

It is believed that foreign investors operating in the securities market regularised by their respective legislations may perform such operations in Russia, provided that they are previously accredited at the Central Bank's offices. This derives from a regulation developed in 2015 that has not yet been put into effect, which is why it cannot be useful.¹

Many offshore fintech services can currently be purchased in Russia, bypassing inconveniences such as lack of passports for corporations and other limitations. Within this category, we can name cryptocurrencies and ICOs. The currency trader Forex provided services to Russian clients through offshore companies even though it was not regulated until 2015, to give an example. There are more cases where foreign financial services can be purchased despite not being subject to regularisation in Russia. A consumer can access a website in English with knowledge of the language and purchase a financial technology product that has not been advertised for the Russian market in the first place. This is the case of foreign crowd-investing and automated investment advisory platforms to which the Russian public has access, although they may offer regulated services.¹

Additional measures must be taken to exclude certain markets in an era where many financial services can be purchased with desktop or smartphone applications. Such measures include banning IP addresses, restricting traffic-generating advertising campaigns to certain zones, and limiting bank transfers to certain banks.¹

Fintech in Russia

Fintech in other countries

Notes

1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/russia