On July 20, 2012, the Russian President signed a highly controversial law that will impose heavy restrictions on foreign funded non-commercial organizations which participate in “political” activity. Potential state oversight will include frequent audits and spot checks and will require NCOs to publicly identify themselves as “foreign agents.”

These developments are set forth in Law No. 121- FZ “Amendments to Certain Legislative Acts with Regard to Regulating the Activity of Non-Commercial Organizations Fulfilling the Functions of Foreign Agents” (the NCO Amendment Law), amending the “Law on Public Association, the Law on Non- Commercial Organizations and Other Legislative Acts.” The NCO Amendment Law has received a significant amount of coverage in the press and is also frequently referred to as the law on nongovernmental organizations (the NGO Law).

Notably, there has been a lot of discussion over the possible implications of the NCO Amendment Law on organizations whose aim is to protect/report on human rights, such as Amnesty International, Human Rights Watch, Transparency International, etc., as well as the effect on recent social activism in Russia and the government crack down on protests and public meetings.

Under the NCO Amendment Law, a Russian NCO which receives funding from foreign sources and engages in any type of political activity is required to:

  • identify itself as a “foreign agent” by registering with a “foreign agents” register; and
  • abide by much stricter state control of its finances and other business activities.

“Foreign agent” NCOs (as well as their structural subdivisions) will be obliged to file: (a) a report on the expenditure of funds received from foreign sources on a quarterly basis, (b) a report on the composition of their managerial bodies on a semiannual basis, and (c) annual audit reports. They also must publish the above information on the internet or in other mass media sources on a semiannual basis.

The term “political activity” is defined very broadly. Under the NCO Amendment Law, an NCO is deemed to be participating in political activities in Russia if, irrespective of the purposes and objectives specified in its foundation documents, it participates (including by means of financing) in organizing and holding political events in order to influence the state authorities to make decisions aimed at changing existing state policy, as well as in forming public opinion with the same purpose.

An NCO will face criminal prosecution for a failure to comply with the requirements envisaged by the NCO Amendment Law.

Specifically:

  • if an NCO willfully fails to submit documents required for it to be entered in the “foreign agents” register, its representatives will be subject to penalties of up to 300,000 rubles (appr. $10,000), or compulsory community service of up to 480 hours. In addition, if circumstances permit, more severe penalties may be imposed, i.e., correctional labor or imprisonment for up to two years.
  • if an NCO encourages people “to refuse fulfilling their civic duties, or to commit other unlawful acts,” it will be subject to a penalty of up to 200,000 rubles (appr. $7,000), or up to three years of restricted freedom (without imprisonment), or compulsory labor for up to three years, or imprisonment for the same period for its officers. The individuals in charge of such an NCO will be subject to similar penalties.
  • religious or public associations that encourage or involve violence or other activities harmful to the health of others, including the individuals managing such associations, will be subject to a penalty of up to 300,000 rubles (appr. $10,000), or up to four years of restricted freedom (without imprisonment), or compulsory labor for up to four years, or imprisonment for the same period.

Activities relating to the following are exempt from the NCO Amendment Law:

  • science, arts and culture;
  • public healthcare and social assistance;
  • protection of mothers and children;
  • promotion of a healthy lifestyle, physical culture and sports;
  • environmental protection; and
  • charitable activities and activities promoting philanthropy and volunteerism.

The NCO Amendment Law enters into force 120 days after publication, i.e., on November 11, 2012.