Foreigners are given the opportunity to visit "In"
In an effort to attract foreign investment, the Russian financial market is witnessing a series of changes aimed at bringing in investors from "unfriendly" countries. The Bank of Russia has recently lifted restrictions on foreign currency purchases for investors from these countries who will invest under the new rules.
However, the current investment landscape in Russia presents significant challenges due to ongoing sanctions and limitations. Since early 2022, Russia has imposed dividend and capital movement restrictions on non-residents from "unfriendly" countries. Joint-stock companies (JSCs) are prohibited from paying dividends to these investors, who must instead deposit their dividends into special C-type accounts. Funds in these accounts can only be used for specific purposes, such as tax payments or buying Russian government bonds (OFZs).
Foreign investors also face the use of special "S" accounts to receive income from securities and proceeds from asset sales. These accounts, part of the current counter-sanctions regime, prevent capital outflow and reduce the attractiveness of the Russian market.
Despite these challenges, a recent decree signed by the President of Russia on July 1, 2025, aims to partially liberalize conditions for new investments. Decree No. 436 establishes a new regime that allows foreign investors from both "friendly" and "unfriendly" countries to make new investments under more liberal terms "without regard to" previous counter-sanctions. This means that investments made after July 1, 2025, will not be subject to the prohibitions and restrictions introduced during 2022-2023.
Investors from "unfriendly" jurisdictions will be able to open special accounts, known as I-type accounts, to invest in the Russian market. These accounts will provide access to deposits in Russian banks, securities, and derivative instruments. However, funds from C-type accounts cannot be used for these investments.
While these measures are intended to attract foreign investment, market participants do not yet expect a mass influx of investors from "unfriendly" countries. They have positively evaluated the initiatives but express concerns about complex transaction processes and guarantees of investment safety.
Currently, investors are primarily from former CIS countries, some Arab countries, and Latin America, as per Sergei Suverov. High-yield stocks in Russia may also be of interest to foreign investors seeking attractive returns.
However, non-residents are also concerned about limitations from their local regulators that prohibit investments in the Russian economy under the threat of sanctions.
These changes come amidst ongoing Western sanctions targeting Russia’s banking sector, energy revenues, and military-industrial complex. These external sanctions indirectly impact foreign investors by limiting financial transactions and complicating investment conditions for entities linked to those jurisdictions.
In conclusion, while the Russian financial market is taking steps to attract foreign investment, the ongoing sanctions environment maintains a complex and constrained environment for foreign investment and financial flows involving Russia.
Investors from "unfriendly" countries may find increased opportunities in Russia's financial market as the Bank of Russia has lifted certain restrictions, allowing them to invest under the new rules. However, the ongoing challenges such as dividend and capital movement restrictions, as well as the complexity of transaction processes and concerns about investment safety, might deter a surge of foreign investors.
The Russian government's recent decree aims to partially liberalize conditions for new investments, offering foreign investors more flexible terms. This decree permits investors from both "friendly" and "unfriendly" countries to establish I-type accounts, granting access to Russian banks, securities, and derivative instruments.
