All Russian legal entities must obtain information on their ultimate beneficial owners.

Russia has recently amended its anti-money laundering law to require that any legal entity, whether private or public (with limited exceptions), must obtain certain information about its ultimate beneficial owners (UBOs). This new requirement was introduced by Federal Law No. 215-FZ, on 23 June [1] and will take effect on 21 December 2016.

Which Entities Must Comply?

All Russian legal entities are required to comply with the new rule. The law does not specify whether foreign companies are also affected, but it appears likely that foreign entities with a registered presence in Russia (for example, a branch or representative office) or that conduct certain other activities in Russia (such as issuing securities) may also be expected to comply.

Which Entities Are Exempt?

Certain types of legal entities are exempted:

  • Russian government (state and municipal) bodies, entities controlled by the state or municipalities, state nonbudgetary funds (for example, the state pension fund or the social insurance fund), state corporations, and legal entities with more than 50% governmental interest
  • International organizations or foreign states
  • Listed securities issuers that are already subject to public disclosure requirements under Russian law
  • Foreign issuers listed with certain foreign stock exchanges designated by the Russian Central Bank (currently including London, New York, Frankfurt, and Hong Kong)

Which UBOs Are Affected?

A UBO is defined as an individual who (a) ultimately, directly, or indirectly owns more than 25% of the equity capital of a legal entity or (b) has the ability to control its actions.

What Information Is Required?

A legal entity must obtain and keep certain information on its UBOs:

  • Full name
  • Citizenship
  • Date of birth
  • Passport details
  • For foreigners who reside in Russia, certain information on migration status
  • Residential address
  • Taxpayer identification number

This is the same information that Russian financial institutions are required to obtain about the UBOs of their corporate clients under existing law. Accordingly, each legal entity that has obtained a bank account in Russia should already have the necessary information in its files.

How to Obtain the UBO Information

The law mandates that a legal entity must undertake reasonable measures available under the circumstances to obtain the information about its UBOs and must document the measures it takes (even if it receives no information).

However, the law does not specify what legal entities should do with such information. The Federal Service for Financial Monitoring (which oversees anti-money laundering efforts) may issue future clarifications or regulations on this topic. We would expect these to follow the approach taken by existing rules in the Russian financial services industry.

The law also states that founders, shareholders, or controlling persons must provide the information required, and they may not argue that the Russian personal data law prevents disclosure.

Duty to Update, Maintain, and Disclose

Each legal entity must update its UBO information at least once a year; maintain the information that it obtained on UBOs, and on the measures it took to collect this information, for at least five years; and provide such information to certain Russian authorities, including the tax service, upon request.

Liability

Failure to comply with these new requirements may result in monetary fines of up to 500,000 rubles per offense for the legal entity and up to 40,000 rubles per offense for managers, such as a general director.