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Trends and climate

Trends

Have there been any recent changes in the enforcement of anti-corruption regulations?

Russian corporate bribery investigations According to information published by the General Prosecutor’s Office, in 2017 there were 430 cases of legal entities being convicted of bribery offences under Article 19.28 of the Administrative Offences Code (ie, unlawful remuneration on behalf of a legal entity). A similar figure can be expected for 2018 given that up to 25 October 2018 legal entities had been penalised for bribery offences in 280 cases. As some legal entities were convicted for apparently related offences under different case numbers, the actual number of convicted legal entities is slightly lower.

Most cases – many of which dealt with illegal payments to civil servants – resulted in the imposition of a fine. Depending on the bribe sum, the law provides for fines of up to Rb100 million (approximately $1.5 million). However, in most cases only the minimum fine of Rb1 million was imposed. This means that Russian bribery investigations against legal entities currently focus on small-scale bribery. As an additional sanction, since 2017 all legal entities convicted of bribery offences under Article 19.28 of the Administrative Offences Code have been prohibited from bidding in state procurement tenders for a period of two years from the date of conviction.

The published information shows that Russian enforcement actions in 2017 and the first three-quarters of 2018 targeted almost exclusively small and medium-sized Russian companies with Russian beneficiaries (many in the construction, transport, oil and gas, and retail sectors across Russia). No major Russian company has been held liable. Moreover, there has been only one conviction of a foreign legal entity (a Swiss trading company).

None of the foreign enforcement actions based on bribery and corruption offences relating to Russia (eg, under the US Foreign Corrupt Practices Act or the UK Bribery Act) seem to have triggered any subsequent anti-bribery and corruption investigations by Russian law enforcement authorities.

Non-Russian enforcement actions Throughout 2017 and 2018, Dutch, Swedish, UK and US authorities completed several partly multinational enforcement actions relating to Russia and other former Soviet republics.

For the first time, the UK Serious Fraud Office concluded a deferred prosecution agreement (DPA) for violations of the UK Bribery Act extending to Russia. The US Securities and Exchange Commission and the US Department of Justice completed a number of investigations into violations of the Foreign Corrupt Practices Act in former Soviet republics (namely, Azerbaijan, Georgia, Kazakhstan and Uzbekistan). Most foreign investigations targeted large-scale bribery in the energy, telecoms and infrastructure sectors and resulted in the payment of significant fines.

Throughout its fiscal year 2018, the World Bank's Integrity Vice Presidency (INT) opened 14 new cases for full investigations of fraud and corruption in World Bank Group-financed activities in Europe and Central Asia. In this period, eight companies and individuals from former Soviet republics (namely, Georgia, Kazakhstan, Ukraine and Uzbekistan) were – as a result of completed INT investigations – debarred for a set period from further projects financed by the World Bank Group.

Self-reporting by legal entities Following recent legislative changes (which entered into force on 14 August 2018), companies operating in Russia can now exclude themselves from liability for bribery by way of self-reporting to the Russian law enforcement agencies.

These legislative changes also authorise the prosecutor’s office opening the investigation against a legal entity to freeze its assets based on a court decision in order to secure the threatening penalty payment.

Additional compliance procedures in public companies Following recent amendments to Federal Law 208-FZ on Joint-Stock Companies (which entered into force on 19 July 2018), public joint-stock companies are now required to implement additional risk management and internal control measures.

Large companies' failure to take anti-corruption measures Transparency International Russia's report "Transparency in Corporate Reporting: Assessing the Russian’s Largest Companies", which was published on 25 January 2018, revealed that most of Russia's 200 largest companies by revenue have failed to take basic anti-corruption measures. The report stated as follows:

  • Only 115 companies have anti-corruption rules which are publicly accessible on their website.
  • Most of the reviewed compliance documents do not include sufficient hospitality provisions (eg, the requirement to report gifts or thresholds for acceptable gifts).
  • Only 20% of the companies expressly prohibit facilitation payments (which may qualify as bribery under Russian law).
  • Only 26% of the companies extend their anti-corruption policies to agents and consultants.
  • 60% of the companies do not have an anonymous hotline for whistleblower reports.
  • Most companies either do not conduct anti-corruption training or organise it only on an irregular basis.

Legislative activity

Are there plans for any changes to the law in this area?

Draft law – protection of whistleblowers On 13 December 2017 the State Duma adopted in its first reading amendments to the Anti-corruption Law, which will introduce measures aimed at protecting individuals who report on corruption offences to:

  • their employer's representative;
  • the Public Prosecutor's Office; or
  • the police.

Draft law – bribery in the interest of affiliated entities In December 2017 the State Duma adopted in its first reading legislative amendments which will close a loophole in regard to the liability of legal entities for corruption offences under Article 19.28 of the Administrative Offences Code (ie, illegal remuneration on behalf of a legal entity).

At present, this offence covers cases of providing, offering or promising bribes by representatives in the name or interest of the legal entity only. Under the proposed amendments, bribery offences committed by the company’s representatives in the interest of its affiliated companies will also be punishable.

Legal framework

Authorities

Which authorities are responsible for investigating bribery and corruption in your jurisdiction?

Public Prosecutor’s Office Bribery and corruption offences under the Administrative Offences Code (committed by legal entities) and the Criminal Code (committed by individuals) are generally investigated by the Public Prosecutor's Office. The relevant functions of the Public Prosecutor's Office are distributed among:

  • the General Prosecutor's Office at the federal level;
  • the prosecutor's offices in the 85 so-called ‘subjects of the Russian Federation’ at the regional level; and
  • the prosecutor's offices of the districts and cities at the municipal level.

Investigative Committee In addition, the Investigative Committee of the Russian Federation – a federal authority which was previously part of the of the Public Prosecutor's Office but since 2011 has been separate and subordinated directly to the president – performs pre-investigative reviews of notifications on offences and preliminary investigations against individuals for bribery and corruption offences under the Criminal Code. The Investigative Committee performs its functions at the federal, regional and municipal levels, through its:

  • central office at the federal level;
  • investigative departments in the subjects of the Russian Federation; and
  • investigative departments of the districts and cities.

Other law enforcement authorities In specific sectors, the functions of other law enforcement authorities may overlap with the investigative functions of the Public Prosecutor's Office and the Investigative Committee. In particular, violations of antitrust requirements during public procurement processes – especially state tenders – are often accompanied by bribery and corruption offences, which are then investigated by the Federal Anti-monopoly Service (FAS). Following the completion of an FAS investigation and the imposition of administrative penalties for the violation of antitrust requirements, the matters may then be transferred to the Public Prosecutor's Office for the opening of administrative or criminal investigations.

Domestic law

What are the key legislative and regulatory provisions relating to bribery and corruption in your jurisdiction?

The relevant Russian legislation mainly consists of:

  • anti-corruption legislation – in particular:

o the National Anti-corruption Plan, which:

  • is adopted every two years by the president;
  • coordinates efforts to combat corruption in Russia; and
  • lists the specific anti-corruption measures to be taken by the Russian state;

o Federal Law 273-FZ on Combatting Corruption 2008 (the Anti-corruption Law), which sets out the legal and organisational framework for the prevention and combatting of corruption, as well as the mitigation and remediation of the consequences of corruption; and

o antitrust regulations – in particular, Federal Law 135-FZ on the Protection of Competition 2006, of which Article 17 regulates the antitrust requirements applicable to public tenders and Article 18 sets out the rules for selecting financial organisations;

  • public procurement regulations – in particular:

o Federal Law 44-FZ on the Contract System in State and Municipal Procurement of Goods, Works and Services 2013, which was adopted to prevent corruption and other violations in the area of public procurement; and

o Federal Law 223-FZ on the Procurement of Goods, Works and Services by Certain Types of Legal Entity 2011, which establishes specific procurement procedures for Russian legal entities, such as state corporations and companies, and state-owned companies;

  • the Administrative Offences Code, which establishes administrative liability for violations of anti-corruption legislation and antitrust and public procurement regulations; and
  • the Criminal Code, which establishes criminal liability for violations of anti-corruption legislation and antitrust and public procurement regulations.

International conventions

What international anti-corruption conventions apply in your jurisdiction?

The following conventions apply:

  • The UN Convention against Corruption 2003, ratified by Federal Law 40-FZ/2006, which entered into force on 21 March 2006.
  • The Council of Europe Criminal Law Convention on Corruption 1999, ratified by Federal Law 125-FZ/2006, which entered into force on 28 July 2006.
  • The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime 1990, ratified by Federal Law 62-FZ/2001, which entered into force on 31 May 2001.
  • The UN Convention against Transnational Organised Crime 2000, ratified by Federal Law 26-FZ/2004, which entered into force on 29 April 2004).
  • The International Convention for the Suppression of the Financing of Terrorism adopted by the General Assembly of the United Nations on 9 December 1999, ratified by Federal Law 88-FZ/2002, which entered into force on 13 July 2002.
  • The Organisation for Economic Cooperation and Development Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions 1997, ratified by Federal Law 3-FZ/2012, which entered into force on 13 February 2012.
  • The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on Financing of Terrorism 2005, ratified by Federal Law 183-FZ/2017, which entered into force on 6 August 2017.

Specific offences and restrictions

Offences

What are the key corruption and bribery offences in your jurisdiction?

The following are the key corruption and bribery offences in Russia:

  • Offences committed by legal entities:

o Unlawful remuneration on behalf of a legal entity – Article 19.28 of the Administrative Offences Code prohibits the bribery of Russian or foreign civil servants or state officials or executives (ie, persons performing executive functions) in commercial or other organisations to induce them to use their authority to act in favour of a legal entity.

  • Offences committed by individuals:

o Bribery in commercial organisations – Articles 204 and 204.2 of the Criminal Code prohibit the giving of bribes to, and taking of bribes by, executives of commercial or other organisations in connection with their role in these organisations.

o Mediation in bribery in commercial organisations – Article 204.1 of the Criminal Code prohibits the direct transfer of bribes to executives of commercial or other organisations on a considerable scale (ie, exceeding Rb25,000 (approximately $380)) on instructions by the bribe giver or bribe taker, as well as promises and proposals of such transfers.

o Bribe taking by civil servants – Articles 290 and 291.2 of the Criminal Code prohibit the taking of bribes by Russian or foreign civil servants or state officials to induce them to use their authority to act in favour of the bribe giver.

o Bribe giving to civil servants – Articles 291 and 291.2 of the Criminal Code prohibit the giving of bribes to Russian or foreign civil servants or state officials.

o Mediation in bribery of civil servants – Article 291.1 of the Criminal Code prohibits the direct transfer of bribes to Russian or foreign civil servants or state officials on a considerable scale (ie, exceeding Rb25,000 (approximately $380)) on instructions by the bribe giver or bribe taker, as well as promises and proposals of such transfers.

Hospitality restrictions

Are specific restrictions in place regarding the provision of hospitality (eg, gifts, travel expenses, meals and entertainment)? If so, what are the details?

Prohibition of gifts between commercial organisations Article 575(1) of the Civil Code prohibits any gifts – excluding common gifts with a value of up to Rb3,000 (approximately $45) – in relationships between commercial organisations. Under Russian law, any benefits transferred to the donee qualify as a gift (Article 572(1) of the Civil Code); therefore, this prohibition also extends to travel expenses, meals, entertainment and other hospitality costs which are borne by companies for the benefit of representatives of their (potential) business partners.

In practice, the prohibition of gifts with a value of more than Rb3,000 is reflected in Russian companies’ compliance regulations. Violations of these restrictions may thus have adverse employment law consequences for the relevant employees.

Prohibition of gifts for civil servants and state officials Russian legislation generally prohibits the receipt of any remuneration by Russian civil servants and state officials in connection with the performance of their duties from individuals or legal entities (including gifts, money, loans, services, entertainment costs and travel expenses).

A ‘civil servant’ is any individual professionally exercising state functions at the federal, regional or municipal level according to:

  • Federal Law 58-FZ on the System of State Service in the Russian Federation;
  • Federal Law 79-FZ on Public Service of the Russian Federation;
  • Federal Law 76-FZ on the Status of Military Personnel; and
  • Federal Law 25-FZ on Municipal Service in the Russian Federation.

The term ‘state official’ extends to a limited number of individuals who are directly exercising state powers at the federal level or at the regional level of the 85 so-called ‘subjects of the Russian Federation’.

The general prohibition on accepting gifts does not apply to gifts received by Russian civil servants and state officials in connection with:

  • protocol events;
  • business trips; and
  • other official events.

However, gifts received at such occasions are deemed to be state property and subject to transfer to the relevant state body (eg, Article 17(1)(6) of Federal Law 79-FZ on Public Service of the Russian Federation).

Prohibition of gifts for employees of state corporations According to Article 349.1 of the Labour Code and Article 2(b) of Order of the Russian Government 841/2012, the general prohibition on receiving gifts is extended to individuals in certain roles in state corporations and companies. State corporations and companies are non-commercial organisations which are set up by Russia under federal law (Articles 7.1 and 7.2 of the Law on Non-commercial Organisations). Examples of state corporations are:

  • Vnesheconombank;
  • Rostec;
  • Roscosmos; and
  • Rosatom.

Commercial organisations with a majority participation by the Russian state (eg, Gazprom Public Joint Stock Company and Rosneft Oil Company) do not qualify as state corporations or companies under Article 349.1 of the Labour Code.

Administrative and criminal liability The violation of the above-listed restrictions regarding the granting and receiving of gifts does not entail any administrative or criminal liability. Such liability would require the existence of additional elements of an administrative or criminal offence – in particular, an action taken in return for the gift. The scope of the penalties under the Administrative Offences Code and the Criminal Code depends on the amount of the bribe sum.

Best practice Best practice in Russia is the adoption by an organisation of internal compliance regulations incorporating:

  • the prohibition on granting and receiving gifts exceeding Rb3,000 in relationships between commercial organisations, according to Article 575(1) of the Civil Code; and
  • the general prohibition on granting any gifts to Russian civil servants and state officials or employees of state corporations and companies.

The adoption of these internal compliance regulations is one of the anti-corruption measures to be mandatorily undertaken by each organisation operating in Russia, according to Article 13.3 of the Anti-corruption Law.

Facilitation payments

What are the rules relating to facilitation payments?

There are no specific rules regulating facilitation payments. Therefore, such payments are subject to the general rule on the prohibition of gifts with a value exceeding Rb3,000 (approximately $45) in relationships between commercial organisations and the penalties for unlawful remuneration and bribery under the Administrative Offences Code and the Criminal Code.

Liability

Scope of liability

Can both individuals and companies be held liable under anti-corruption rules in your jurisdiction?

Companies can be held liable for bribery under Article 19.28 of the Administrative Offences Code (ie, unlawful remuneration on behalf of a legal entity).

Individuals can be held liable for a number of bribery offences under the Criminal Code (eg, Articles 204 (bribery in a commercial organisation), 204.1 (mediation in bribery in a commercial organisation), 291 (bribe giving to a civil servant) and 291.1 (mediation in bribery of a civil servant) of the Criminal Code).

In addition, under Russian corporate law, each director of a company (supervisory board member, general director and member of the management board) can be held liable by the company’s shareholders for damages caused to the company due to their culpable actions or omissions. In practice, directors are regularly held liable for damages caused to a company by the payment of fines under the Administrative Offences Code. However, there seems to be only one court decision (dated 2014) which confirms that directors can be held liable for damages caused specifically by fines under Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity).

Can agents or facilitating parties be held liable for bribery offences and if so, under what circumstances?

No specific rules regulate the administrative or criminal liability of agents or facilitating parties. Therefore, such agents and parties are held liable for bribery offences under the Administrative Offences Code (in particular, unlawful remuneration on behalf of a legal entity according to Article 19.28) and the Criminal Code.

Foreign companies

Can foreign companies be prosecuted for corruption in your jurisdiction?

Under the Administrative Offences Code, foreign companies bear administrative liability for administrative offences committed in Russia. Administrative offences under Article 19.28 of the code (ie, unlawful remuneration on behalf of a legal entity) which were committed outside Russia can be prosecuted:

  • if they are directed against the interests of Russia; or
  • in the cases provided for by international treaties which Russia has signed (Article 1.8(3) of the code).

The Strategy of National Security of the Russian Federation (approved by Presidential Decree 683/2015) defines the national interests only vaguely as the “aggregate of internal and external needs of the Russian state to ensure security and sustained development of its identity, society and nation”. Based on this vague definition, any foreign bribery offence involving a Russian element may, theoretically, be subject to administrative proceedings in Russia.

However, the risk of ungrounded extraterritorial investigations is limited by the express prohibition of double jeopardy; Russian jurisdiction arises only if the foreign company has not been held liable in a foreign state.

Whistleblowing and self-reporting

Whistleblowing

Are whistleblowers protected in your jurisdiction?

Protection of civil servants and state officials At present, Russian law contains only one specific provision on the protection of whistleblowers. Article 9(4) of the Anti-corruption Law states that civil servants or state officials who report on corruption violations will enjoy state protection. This protection is afforded in accordance with the general Russian legal provisions granting protection to participants in criminal cases, in particular:

  • the Criminal Procedure Code;
  • Federal Law 119-FZ on the State Protection of Victims, Witnesses and Other Participants in Criminal Proceedings 2004; and
  • Federal Law 46-FZ on the State Protection of Judges, Public Officials of Law Enforcement and Controlling Bodies 1995.

Extended whistleblower protection On 13 December 2017 the State Duma adopted in its first reading amendments to the Anti-corruption Law, which will introduce measures in Russia aimed at protecting whistleblowers who report on corruption offences.

This legislative process follows the recommendations under the Organisation for Economic Cooperation and Development (OECD) Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions to establish effective mechanisms for the protection of individuals reporting on the bribery of foreign public officials.

Exceeding these recommendations, the draft law extends to the reporting on any bribery offence in the public or private sector in Russia. According to the draft law, individuals who report such an offence to their employer's representative, the Public Prosecutor's Office or the police will be protected by the state. The protective measures include:

  • confidentiality obligations regarding the whistleblower’s identity and the content of their report;
  • protection against any discrimination in regard to the whistleblower’s employment situation for two years following the reporting; and
  • the granting of free legal aid to the whistleblower.

If adopted, the draft law is likely to require organisations operating in Russia to:

  • adjust their procedures for handling whistleblower reports from Russia;
  • establish mechanisms to obtain a whistleblower's consent for the use of personal data; and
  • adopt in Russia an internal document regulating the handling of whistleblower reports.

Self-reporting

Is it common for leniency to be shown to organisations that self-report and/or cooperate with authorities? If so, what process must be followed?

Self-reporting Since 14 August 2018, companies operating in Russia have been able to exclude themselves from liability for bribery by way of self-reporting to the Russian law enforcement agencies. Based on changes to the Administrative Offences Code, legal entities will not be held liable if they enabled:

  • the uncovering of the relevant violation (by the company);
  • the conduct of an administrative investigation (against the company); or
  • the uncovering, disclosure and investigation of the related criminal offence (committed by individuals acting in the interest of the company).

The self-reporting will release the company from penalty payments under Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity). In contrast to other jurisdictions, this release includes 100% of the penalties and is mandatory; it is not subject to the discretion of the law enforcement agencies or courts.

The new self-reporting rules apply to all types of bribery, except for the bribery of foreign public officials. The Russian legislature has chosen to exclude such bribery from the self-reporting rules in order not to deviate from the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions, which was acceded by Russia and does not provide for comparable rules.

The benefits of self-reporting will be limited to the reporting company itself. Individuals who made bribery payments in the interest of the company – typically employees and agents – will continue to face prosecution under the Criminal Code. However, individuals may separately self-report under the leniency provisions of Articles 204 (bribery in a commercial organisation), 204.1 (mediation in bribery in a commercial organisation), 291 (bribe giving to a civil servant) and 291.1 (mediation in bribery of a civil servant) of the Criminal Code.

Cross-border reporting The reporting to non-Russian law enforcement authorities regularly requires the transfer of protected data from Russia to foreign jurisdictions. The collection and cross-border transfer of such data is subject to extensive Russian regulation.

In particular, emails, WhatsApp messages, SMS messages and other correspondence by Russian employees are protected by the privacy of communication principle. Unless the Russian company has adopted internal rules on the use of office communication means for business purposes only, the collection and transfer of such data requires prior written consent by the relevant employees.

The transfer of Russian employees’ personal data also requires the relevant employees' written consent to the transfer (which may, by way of precaution, also be reflected in the employment agreement). In case of a cross-border transfer, such a transfer must be specifically consented to. Since employee consent can be difficult to obtain in practice, the relevant data may have to be depersonalised before the transfer. Further, a data transfer agreement must be signed between the Russian employer and the foreign recipient. In addition, due to Russian data localisation requirements, the primary database for personal data transferred abroad must be set up in Russia and – before the transfer of any new data – must be updated accordingly.

On the other hand, Russian law has no general attorney-client privilege. A concept similar to this privilege exists only in the form of advocate secrecy in relationships between clients and advocates (ie, lawyers who passed a bar exam to represent clients in criminal and certain civil law court proceedings). Therefore, the protection of the attorney-client privilege does not usually restrict the (cross-border) transfer of data.

Dispute resolution and risk management

Pre-court settlements

Is it possible for anti-corruption cases to be settled before trial by means of plea bargaining or settlement agreements?

Since 2009, Chapter 40.1 of the Criminal Procedural Code has allowed plea bargaining agreements to be entered into in criminal proceedings, including proceedings regarding bribery offences.

Under a plea bargaining agreement, the defendant undertakes to provide information and to cooperate in the investigation of crimes committed by other persons (disclosure of their own crimes does not suffice). If the defendant fulfils these obligations and circumstances aggravating their liability are not determined, the sentence for their own crimes will not exceed half of the maximum penalty provided for such types of crime by the Criminal Code. The court has discretion to show further leniency.

Defences

Are any types of payment procedure exempt from liability under the corruption regulations in your jurisdiction?

Russian law does not provide for such a concept.

What other defences are available and who can qualify?

Under the Administrative Offences Code, a legal entity will be guilty of an administrative offence if it can be established that it did not take all necessary measures to ensure compliance with the violated regulations and that this violation constitutes the relevant administrative offence (Article 2.1 (2)). This means that a legal entity accused of an offence under Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) may claim that it has taken all measures necessary to prevent such bribery committed by its employees or agents.

In particular, the legal entity may claim that it fully complied with its obligations under Article 13.3 of the Anti-corruption Law in order to be exempt from administrative liability. However, following the current court practice, few legal entities prosecuted had implemented the necessary measures and were exempt from liability. The relevant decisions give no guidance on the proper implementation of anti-corruption measures in order to be exempt from liability. However, the fact that very few companies have succeeded confirms that the prosecutors and courts have strict requirements as to the sufficiency of a company’s compliance management system.

Risk management

What compliance procedures and policies can a company put in place to assist in the creation of safe harbours?

General compliance procedures Article 13.3 of the Anti-corruption Law obliges organisations to develop and implement measures to prevent corruption. These measures include:

  • designating departments and officers responsible for preventing bribery and other violations of the law;
  • cooperating with law enforcement authorities;
  • developing and implementing policies and procedures designed to ensure ethical business conduct;
  • adopting a code of ethics and professional behaviour for employees;
  • identifying and regulating conflicts of interest; and
  • preventing the creation of false accounts and the use of forged documents.

The general obligation under the Anti-corruption Law to develop and implement anti-corruption measures is further elaborated by the Methodical Recommendations for the Development and Adoption of Anti-corruption Measures of the Federal Labour Ministry 2013. This document details the specific steps that organisations should take in order to comply fully with their obligation under the Anti-corruption Law.

The Anti-corruption Law does not provide for penalties where an organisation fails to implement the required anti-corruption measures. However, such failure may lead to liability under the Administrative Offences Code if the organisation is unable to demonstrate that it has taken all measures necessary to prevent bribery committed by its employees or agents.

Additional compliance procedures for public companies Since 19 July 2018 Article 87.1 of Federal Law 208-FZ on Joint-Stock Companies has required public joint-stock companies to implement risk management and internal control measures. Public joint-stock companies are Russian joint-stock companies whose shares are publicly traded or whose company name and charter refer to it as public. In particular, the public company's supervisory board must adopt a policy on the organisation of risk management and internal controls.

Further, from 1 July 2020 each public company must perform an internal audit to assess the reliability and efficiency of its risk management and internal controls. The audit must be performed by an officer of the company or a legal entity instructed by the company. To ensure independence from the company's management, the auditor will be appointed and dismissed by the supervisory board. The supervisory board will also approve the terms of the employment or services agreement with the auditor.

Record keeping and reporting

Record keeping and accounting

What legislation governs the requirements for record keeping and accounting in your jurisdiction?

General accounting principles are regulated by Federal Law 402-FZ on Accounting 2011. The requirements for financial reporting are set out in Federal Law 129-FZ on State Registration of Legal Entities 2001. The consolidation of financial reporting is regulated by Federal Law 208-FZ on the Consolidation of Financial Reporting 2010. The requirements under these federal laws are further specified by:

  • regulations on accounting, issued by the Federal Finance Ministry;
  • charts of accounts and instructions on their application issued by the Bank of Russia and the Federal Finance Ministry;
  • accounting standards for specific sectors issued by the Bank of Russia;
  • main methodical instructions and recommendations issued by the Federal Finance Ministry; and
  • summaries of practice of application of legislation prepared by the Federal Finance Ministry.

What are the requirements for record keeping?

The general accounting requirements are as follows:

  • Accounting must be maintained without interruption from the date of the organisation's state registration until the date on which it ceases its activity due to reorganisation or liquidation.
  • Accounting must be maintained according to a general or simplified system.
  • The maintenance of accounting and record keeping must be organised by the organisation's chief executive.
  • Accounting must be maintained based on an accounting policy adopted each year.
  • All commercial facts must be documented by primary accounting documents on paper or in electronic form.
  • Information reflected in the primary accounting documents is subject to timely registration and storage in the accounting registers.
  • Assets and liabilities are subject to inventorisation.
  • Accounting items must be recorded in Russian rubles.

Reporting

What are the requirements for companies regarding disclosure of potential violations of anti-corruption regulations?

Under Russian law, companies are not specifically obliged to disclose potential violations of anti-corruption regulations. However, the voluntary disclosure of such violations may be part of the measures taken by organisations to comply with their obligations under the Anti-corruption Law to develop and implement anti-corruption measures. Further, since 14 August 2018 self-reporting to the Russian law enforcement agencies may exclude companies from liability under Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity).

Penalties

Individuals

What penalties are available to the courts for violations of corruption laws by individuals?

Individuals may be held liable for committing the following anti-corruption offences under the Criminal Code:

  • Bribery in a commercial organisation – Article 204 provides for:

o a penalty of between Rb2 million (approximately $30,000) and Rb5 million (approximately $75,000), two to five years' salary or 50 to 90 times the bribe sum, and an occupational ban from certain professions for up to six years; or

o seven to 12 years’ imprisonment, a penalty of up to 50 times the bribe sum and an occupational ban from certain professions for up to six years.

  • Mediation in bribery in a commercial organisation – Article 204.1 provides for:

o a penalty of up to Rb1.5 million (approximately $23,000), 18 months’ salary or 40 to 70 times the bribe sum and an occupational ban from certain professions for up to six years; or

o up to seven years’ imprisonment, a penalty of up to 40 times the bribe sum and an occupational ban from certain professions for up to six years.

  • Bribe taking by a civil servant – Article 290 provides for:

o a penalty of between Rb3 million (approximately $45,000) and Rb5 million (approximately $75,000), three to five years' salary or 80 to 100 times the bribe sum and an occupational ban from certain professions for up to 15 years; or

o eight to 15 years’ imprisonment from eight to 15 years, a penalty of up to 70 times the bribe sum and an occupational ban from certain professions for up to 15 years.

  • Bribe giving to a civil servant – Article 291 provides for:

o a penalty of between Rb2 million (approximately $30,000) to Rb4 million (approximately $60,000), two to four years’ salary or 70 to 90 times the bribe sum and an occupational ban from certain professions for up to 10 years; or

o eight to 15 years’ imprisonment, a penalty of up to 70 times the bribe sum and an occupational ban from certain professions for up to 10 years.

  • Mediation in the bribery of a civil servant – Article 291.1 provides for:

o a penalty of between Rb1.5 million (approximately $23,000) and Rb3 million (approximately $45,000), two to three years’ salary or 60 to 80 times the bribe sum and an occupational ban from certain professions for up to seven years; or

o seven to 12 years’ imprisonment, a penalty of up to 70 times the bribe sum and an occupational ban from certain professions for up to seven years.

Companies or organisations

What penalties are available to the courts for violations of corruption laws by companies or organisations?

A legal entity which commits an offence under Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) may face:

  • for bribery, a penalty of up to three times the bribe sum but no less than Rb1 million (approximately $15,000);
  • for large-scale bribery where the bribe sum exceeds Rb1 million (approximately $15,000), a penalty of up to 30 times the bribe sum but no less than Rb20 million (approximately $300,000); or
  • for extra-large scale bribery where the bribe sum exceeds Rb20 million (approximately $300,000), a penalty of up to 100 times the bribe sum but no less than Rb100 million (approximately $1.5 million).