In connection with a recent bulletin* of the Federal Service for Financial Monitoring (Rosfinmonitoring), legal entities are reminded that with effect from 21 December 2016 they are required to keep and disclose their beneficial ownership information to the competent Russian authorities in accordance with the amended Federal Law “On Combating Money Laundering and Financing of Terrorism”* (the “Law”). We reported on this obligation in a previous Alert. Beneficial owners are individuals who own, directly or indirectly (through third parties), more than 25% of shares in a company or have the ability to control its actions.
As required by the Law, legal entities must:
- possess information on, and take reasonable and sufficient steps to identify, their beneficial owners;
- keep beneficial ownership information for five years and update it regularly (at least once a year); and
- disclose relevant information at the request of the tax and other competent authorities.
Failure to comply with the requirements above may result in an administrative fine of up to RUB 40,000 (EUR 667) being imposed on the company’s officials and/or RUB 500,000 (EUR 8,333) on the company itself.
The above requirement to keep and disclose beneficial ownership information must be met by all legal entities, save for:
- state corporations
- entities in which the Russian Federation holds more than 50%;
- listed issuers who are subject to disclosure requirements under Russian securities law;
- foreign companies whose securities are listed on foreign stock exchanges;
- unincorporated foreign structures with no beneficial owner or sole executive body.
If, having taken all reasonable efforts, a compnay fails to identify its beneficial owners, it must provide the requesting competent authority with information on the measures it has taken, including relevant requests to and responses from its founders.