In summary, Article 5r requires EU entities, which are more than 40 per cent owned by Russian interests, to report any transfers of funds out of the EU exceeding €100,000 to the competent authorities of their home member state. A parallel semi-annual reporting obligation for credit and financial institutions initiating such transfers also applies. You can access our earlier blog post for comprehensive details on Article 5r, here.

Key points from the FAQs:

• Purpose of the Article 5r reporting obligations: The purpose is to enable the identification of flows of funds leaving the EU, not stop the repatriation of profits out of the EU.
• Coverage: Article 5r covers all types of funds irrespective of currency. Transfers from non-EU branches of EU entities or credit or financial institutions are caught. Transfers from non-EU subsidiaries of EU entities credit or financial institutions are not caught, subject to circumvention considerations.
• Indirect Transfers: Indirect transfers are transfers from an EU entity routed through intermediaries within the EU before reaching a non-EU recipient.
• Reporting Threshold: The reporting obligation applies to transfers, in sum, exceeding €100,000 within a reporting period, with no minimum threshold for individual operations.
• Reporting Period and Requirements: The first report, covering January to March 2024, is due by 1 May 2024. Subsequent reports are due quarterly or semi-annually, with deadlines as specified:

For EU entities which are more than 40 per cent owned by Russian interests: from the second quarter of 2024 onwards, the submission of reports should be within two weeks after the end of each quarter.

Specifically, for the second quarter of 2024 the deadline is set for 15 July 2024, for the third quarter of 2024 the deadline is set for 15 October 2024, for the fourth quarter of 2024 the deadline is set for 15 January 2025, and so forth.

For EU credit or financial institutions: for the first semester the deadline is set for 15 July 2024, for the second semester the deadline is set for 15 January 2025, and so forth.

• Aggregate ownership: Ownership exceeding 40 per cent by Russian interests triggers reporting obligations, regardless of direct or indirect ownership. Aggregate ownership by multiple Russian interests should be taken into account.
• Associations and Foundations: Reporting applies to legal entities meeting ownership criteria, as defined in Article 5r.
• Dual Citizenship: Article 5r applies to EU entities owned by Russian citizens with dual citizenship, including EU citizenship.
• Group vs. Entity Level Reporting: Reporting is required at the entity level, addressed to the competent authority of the Member State where the institution is located. There is no option for group reporting.
• Interaction between Articles 5r(1) and 5r(2): The reporting obligations of EU entities which are more than 40% owned by Russian interests and the reporting obligations of credit and financial institutions are mutually exclusive.
• Reporting Template: The EU Commission provides a reporting template for guidance, however its use is not mandatory.

A series of related announcements were issued by various competent authorities within the EU, including:

• An announcement dated 16 April 2024 by the Cyprus Ministry of Finance (MoF). The MoF encourages both entities and credit and financial institutions to utilise the reporting template that the EU Commission provided, for their reporting needs. Individuals subject to notification obligations outlined in Article 5r are requested to send their completed notifications to the MoF via email at compliance@mof.gov.cy.

Ministry of Finance announcement (only in Greek) can be found here.

• An announcement dated 15 April 2024 from the Commission de Surveillance du Secteur Financier (CSSF) of Luxembourg regarding the European Commission FAQs and the reporting template concerning Article 5r of Regulation 833/2014. Additionally, the announcement provides guidance directing individuals to access these resources on the website of the Ministry of Finance.

The CSSF’s announcement can be found here.

The updated FAQs on the reporting on outgoing transfers can be found here.

The Reporting template on outgoing transfers under Article 5r can be accessed here.