Russian law continues to develop with respect to the disclosure of beneficial owners of Russian businesses. New provisions came into force at the end of 2016, which supplement the Federal Law on Combating Laundering of Money Received by Illegal Means and Financing of Terrorism (115-FZ), dated August 7 2001.
The new provisions require all Russian legal entities (including those with non-Russian shareholders) to:
- take reasonable and available steps to identify their beneficial owners;
- disclose their beneficial owners to the Federal Financial Monitoring Service or the tax authorities on request;
- verify and, if needed, update this information at least once a year; and
- keep information regarding their beneficial owners and the steps that they have taken to identify them for at least five years.
For this purpose, the law expressly entitles a Russian legal entity to request information from its shareholders, as well as from other persons who in any way control the entity. It also obliges shareholders and other controlling persons to provide this information.
The administrative penalty for non-compliance with the law ranges from Rb100,000 to Rb500,000 (approximately $1,700 to $8,600) for the Russian legal entity and from Rb30,000 to Rb40,000 (approximately $500 to $700) for officers of the Russian legal entity (in particular, the general director).
In practice, the identification of beneficial owners is already incentivised by Russian banks which hold the accounts of Russian legal entities. Since the banks must disclose their clients' beneficial owners to the Federal Financial Monitoring Service, requests from the banks to their clients are frequent. Clients usually comply with these requests, as otherwise the bank may:
- terminate the relevant bank account (deposit) agreement (in particular, if the bank has refused to perform transactions due to missing information regarding the client's beneficial owners at least twice in one year); and
- impose a contractual penalty or other contractual remedies on the Russian legal entity (based on the agreement between the client and the bank).
For further information on this topic please contact Olga Mokhonko or Hannes Lubitzsch at Noerr by telephone (+7 495 799 56 96) or email (firstname.lastname@example.org or email@example.com). The Noerr website can be accessed at www.noerr.com.
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