Russian Federation Seeks to Tighten Financial Regulation, Boost Governance
The Russian Federation has taken significant steps to strengthen its financial regulatory framework and governance structure, aiming to enhance stability and transparency in the sector. At the heart of this effort is the Central Bank of the Russian Federation (CBR), which has been vested with broad powers to regulate and supervise the provision of financial services and products.
Authorizations and Regulations
The CBR is responsible for authorizing over 23 types of activities on the financial market, including:
- Banking
- Insurance
- Securities trading
- Crowdfunding
- Loans
- Mortgages
- Deposits
- Securities
- Derivatives
- E-money
To operate in Russia’s financial sector, companies must obtain authorization from the CBR. This involves submitting a comprehensive application package and undergoing on-site inspections or assessments of their IT infrastructure.
Strict Requirements for Financial Market Participants
The CBR has set strict requirements for financial market participants, including those conducting high-risk activities such as:
- Banks
- Insurance companies
- Pension funds
Foreign investors seeking to participate in Russia’s financial sector face certain limitations. The CBR caps foreign investment in Russian banks and insurance companies at 50%. Additionally, insurance companies with over 49% foreign ownership are prohibited from providing certain types of insurance services.
Regulatory Framework Supported by Laws
The regulatory framework is supported by a range of laws, including:
- Federal Law on the Central Bank of the Russia Federation
- Various sector-specific laws
The CBR has also delegated powers to self-regulatory bodies for non-banking financial organizations, which must comply with approved standards.
Experts’ Views
Experts say that Russia’s efforts to strengthen its financial regulation and governance will help improve market stability and investor confidence. “The country is taking a proactive approach to addressing potential risks in the financial sector,” said one analyst. “This should benefit both domestic and international investors.”
Key Statute: Federal Law on the Central Bank of the Russian Federation (the Bank of Russia)
Date: 15 March 2021