Keep ahead of the curve: new reporting requirements for outgoing transfers as of 1 May 2024!



​​According to the Article 5r of Council Regulation 833/2014, legal persons, entities and bodies domiciled within the EU must adhere to a reporting requirement for any fund transfer surpassing 100,000 EUR outside the EU. 

This obligation applies to entities within the EU whose proprietary rights are directly or indirectly held for more than 40% by: a) a legal person, entity, or body established in Russia; b) a Russian national; or c) natural person residing in Russia.

Reported correctly and timely? Key considerations for EU outbound fund transfers:

  • Reporting is mandated to the competent authority of the Member State in which the company is domiciled.
  • Any transfer of funds surpassing 100,000 EUR outside the EU within a quarter must be reported.
  • Transfer made directly or indirectly, through single or multiple operations.

Kindly note, that the reporting obligation also extends to credit and financial Institutions, as stipulated in Paragraph 2 of Article 5r.

European Commission's latest: enhanced clarity on reporting conditions in updated FAQs - 12 April 2024

The key objective of this requirement is to enable national competent authorities (NCAs) to more effectively assess whether certain types of transfers carry a risk of violating sanctions related to Russia, while also aiding in the mapping of Russia’s revenue sources.

Keep in mind: Reports are due within two weeks following the close of each quarter. For the second quarter, reporting must be completed by 15 July 2024

The initial reporting by obligated operators, as outlined in paragraph 1 of Article 5r, should encompass the period from 1 January to 31 March 2024. However, the requirement to submit this report does not come into effect until 1 May 2024. This provision grants obligated entities more time to fulfill this initial reporting, streamlining compliance with this new obligation. Starting with the second quarter (Q2) of 2024, reporting is due two weeks after the conclusion of each quarter. For instance, for Q2, the deadline is 15 July 2024; for Q3 - 15 October 2024; for Q4 15 January 2025; and for Q1 2025 15 April 2025.

Enhanced reporting: Commission's recommended template for entities and EU banks

The Commission has released a reporting template for use by the entities concerned and EU banks. The template can be accessed here​. It is important to note that while this template is recommended, it's not mandatory for the entities and EU banks to utilize it.

Noteworthy clarifications 

Navigating the intricacies of financial regulations requires a keen eye for detail. The latest measure extends to cover all outbound transfers initiated by relevant Russian-owned companies, even those intended for profit repatriation.

This measure applies to all types of funds, regardless of the currency. At its core, Article 5r emerges as a guiding lighthouse, addressing transfers held within branches of EU credit or financial institutions or operators located outside the EU.

However, it is imperative to note the boundaries set by Article 5r - it does not extend its reach to transfers held in subsidiaries of EU entities operating outside the EU's jurisdiction.

Delving deeper, the meaning of "indirect transfer of funds out of the EU" adds some sort of complexity. Imagine funds originating from an EU entity, traversing through intermediaries within the EU, before reaching a recipient beyond the EU borders.

When it comes to reporting, needless to highlight the importance of precision. There exists no minimum threshold for individual operations; instead, a cumulative threshold of 100,000 EUR applies within each reporting period, be it quarterly or semesterly.

It is crucial to bear in mind that reporting is more than just numbers -​ it is about capturing the bigger picture. Therefore, aggregate ownership must be attentively accounted for. And lastly, the crucial point to note is that indirect ownership can be understood as the absence of nominal ownership over the entity, instead, it is established through a chain of intermediaries.

Overall, in this ever-evolving regulatory landscape, understanding of above mentioned nuances is essential. These clarifications serve as a cornerstone, fostering compliance with confidence and precision.​​​​​​​​​


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Ignas Tamašauskas

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