What is the Authorization for Credit from Foreign Sources (ACF)?
The Authorization for Credit from Foreign Sources (ACF) is a permit or regulatory procedure required for receiving international money transfers. It may be necessary for both individuals and legal entities who wish to receive funds from foreign partners, clients, relatives, or organizations. The ACF not only regulates the process of receiving funds but also ensures transparency in terms of tax and legal compliance.
Stricter requirements may apply to large transfers or when funds are received from high-risk countries in terms of money laundering or terrorist financing. In such cases, obtaining an ACF helps financial and legal institutions monitor capital flows.
2. Why has ACF become necessary?
The need for ACF is driven by several factors:
- Financial flow control: Countries aim to control incoming foreign funds to prevent money laundering and illegal activities.
- Tax transparency: Foreign money transfers may be subject to taxation. A permit system allows authorities to track such transactions and prevent tax evasion.
- Economic protection: A massive influx of foreign currency can affect exchange rate policies and cause economic imbalances. ACF allows states to regulate currency flows and avoid sharp exchange rate fluctuations.
Important: Starting from July 1, 2025, new regulations require all individuals who are receiving money from abroad for the first time to obtain an ACF. This is linked to the introduction of a transfer limit of $150,000 USD. If the amount exceeds this threshold, obtaining ACF becomes a mandatory condition for the crediting of funds.
This measure is introduced to enhance control over foreign investments and protect the country’s currency market.
3. How to obtain an ACF?
The procedure for obtaining an ACF may vary depending on the country and the requirements of financial and tax authorities. However, in most cases, it includes the following steps:
- Submitting an application: The recipient must apply to the authorized body (e.g., central bank or sending bank). The application should include the source of funds, the amount, and the purpose of the transfer.
- Providing documentation: Supporting documents may be required to confirm the legitimacy of the transfer. This can include a contract with a foreign partner, bank statements, income source documentation, etc.
- Review and verification: Regulators review the submitted information. If funds come from high-risk countries, the verification process may be more thorough.
- Receiving the ACF: After successful verification, the applicant receives a certificate or permission allowing the funds to be credited to their account.
4. ACF Costs: What to Know
In many countries, obtaining an ACF may involve fees. The cost depends on several factors:
- Transfer amount: Higher amounts may incur higher fees. Some countries charge a fixed rate, while others use a percentage-based fee.
- Recipient type: Fees may vary for individuals and legal entities. Businesses might face higher fees than private individuals.
- Processing speed: Some authorities offer expedited processing for an additional fee, which may be useful for urgent transfers.
Examples of fee structures:
- Fixed rate: Some countries charge a fixed fee, e.g., $1,950 USD for transfers up to $165,000 USD.
- Percentage of transfer: In certain jurisdictions, fees range from 0.8% to 2.1% of the transfer amount. This is especially relevant for large transactions like investments or business funding.
- Simplified schemes for small transfers: Some countries offer simplified and cheaper ACF procedures for small private transfers (e.g., sending money to relatives), with possible discounts or no fees at all.
5. What are the risks of not obtaining an ACF?
Failing to obtain the required authorization can lead to serious consequences:
- Fines: In some countries, receiving funds without ACF may result in fines, and the funds themselves may be frozen or confiscated.
- Account blockage: The bank or financial institution may block the transaction or even freeze your account if legal violations are found.
- Criminal liability: In severe cases, such as connections to illegal activities (e.g., terrorism financing, money laundering), criminal charges may follow.
6. Important Considerations for Individuals and Legal Entities
For individuals, the ACF process may be more streamlined, especially when transfers are for personal reasons such as family support or proceeds from property sales. Still, it is important to comply with legal requirements and submit the necessary documentation.
Legal entities may face more complex procedures. Companies, particularly those involved in international trade or finance, should be especially diligent in meeting regulatory requirements, as large transactions are subject to stricter scrutiny. It is important to properly document the source and purpose of funds and follow applicable tax laws.
7. Conclusion
The Authorization for Credit from Foreign Sources (ACF) is an essential financial control tool that ensures transparency and security in international money transfers. For many, it is a necessary part of managing foreign economic activity and preventing illicit operations. However, obtaining an ACF may require time, document preparation, and sometimes significant fees.
The new rules in Russia, effective July 1, 2025, requiring ACF for first-time transfers and setting a $150,000 limit, underscore the government’s efforts to protect the currency market and ensure transparency in international financial flows.
