"Could" conveys a sense of POSSIBILITY when used as an auxiliary verb with any other verb. In this case, your main verb is "to live" and it is in the present progressive tense, in the question form. Related sentences...
She is living in russia. (definite statement)
Question form of definite statement:
Is she living in Russia?
USING "COULD" TO CONVEY POSSIBILITY, NOT DEFINITE
She could be living in Russia. (not definite; it is a possibility)
Could she be living in Russia?