07.06.2013 Karina Starikova, junior associate at Maxima Legal

Changes in legislation aimed at preventing illegal financial transactions

First of all, some amendments were introduced to the Criminal Code of the Russian Federation.

In Article 193 of the Russian Criminal Code establishing responsibility with respect to the evasion of the performance of obligations related to repatriation of funds denominated in foreign currency or Russian roubles the limit for large amount is reduced from 30 million Russian roubles to 6 million Russian roubles. As soon as the foregoing amendments become effective 30 million Russian roubles will represent an especially large amount.

In addition, Article 193.1 establishing responsibility for carrying out currency operations involving transfer of funds denominated in foreign or Russian currency to the bank accounts of non-residents in case of furnishing of those documents that contain knowingly misleading information regarding the grounds, objectives and designated purpose of such transfer is added to the Russian Criminal Code together with Article 201.1 regarding illicit transfer of cash and/or financial instruments across the customs border of the Customs Union  within the framework of the EurAsEC.

The Federal Law “On the Counteraction of the Legalization of Proceeds of Crime and the Financing of Terrorism” was supplemented with a concept of the beneficiary owner meaning the person who ultimately either directly or indirectly (through third persons) owns (possesses dominant participation exceeding 25 per cent in the capital) the client being a legal entity, or who may control the client’s actions. Moreover, those organizations that are engaged in operations with funds or other assets shall assume reasonable and assumable in the circumstances concerned measures aimed at the identification of the beneficiary owners.  

If as a result of the assumed statutory measures aimed at the identification of the beneficiary owners the same is not discovered, the sole executive body of the client can be recognized as such a beneficial owner which presumably serves to encourage organizations to disclosure information about the beneficiary owners.

In addition, after the introduction of the said amendments credit institutions shall have a right not only to refuse entering into a bank account (deposit) agreement with a person if they suspect that such an agreement is being entered into in order to carry out operations aimed at the legalization of proceeds of crime or the financing of terrorism, but also to refuse following their client’s instructions related to the operation with respect to which such a client failed to furnish documents and if the credit institution suspects that the operation is conducted in order to   legalize proceeds of crime or finance terrorism.

In case of reasonable grounds a multiagency coordinating body engaged in combating the financing of terrorism may decide to freeze (block) funds or other assets of the person. Moreover, it is the body itself to decide whether the grounds to suspect that a legal entity or individual is involved in terroristic activity (including the financing of terrorism) are reasonable.

Please see special review with the information on the amendments introduced by the law at issue to legislation on taxes and levies.