The Federal Law “On Amendments to the Federal Law “On Countering Legalization (Money-Laundering) of Proceeds of Crime and the Financing of Terrorism” and to the Code of Administrative Offences of the Russian Federation” has taken effect on December 21, 2016.
The Law institutes new obligations for legal persons acting in Russia as follows:
- to possess information about their beneficial owners, to identify them;
- to obtain information about beneficial ownership at least once a year;
- to keep information about beneficial ownership during five years;
- to provide this information upon requests of the FSFM of Russia (Federal Financial Monitoring Service), of the tax authorities, and of other federal executive authorities empowered by the Russian Government.
The Law defined the concept of "beneficial owner" as a natural person that eventually, directly or indirectly (by means of third parties) owns (has a prevailing participation with a share greater than 25% of the charter capital) a legal entity, or has an opportunity exercise control over actions of this legal entity.
The term "information" includes: surname, name, patronymic (if applicable), nationality, date of birth, requisites of the identity document, information about migration card or other document stating the right of a foreign or a stateless person to stay (reside) in the Russian Federation, place of residence (registration) or place of stay, INN (if any).
This legislative innovation applies to all legal entities operating in Russia, with some exceptions (state corporations, corporations with the share of Russian Federation in their charter capital exceeding 50%, etc.)
In order to fulfill the above-mentioned obligations the Law gives a legal entity the right to request information about beneficial owners from its incorporators, participators, and persons able to control this legal entity in any other way; and at the same time the Law imposes on legal and natural persons, that are incorporators or participators of a legal entity, or are able to control this legal entity in any other way an obligation to provide it with any available to them information necessary to identify the beneficial owners of this legal entity. The Law states as well that transfer of such information does not violate the legislation on personal data.
The Law has also amended the Code of Administrative Offences of the Russian Federation. These amendments established an administrative liability of legal entities for failure to fulfill the obligation to possess, update, and keep information about their beneficiary owners; to provide such information or information about the measures, undertaken to obtain such information, upon requests of the FSFM of Russia (Federal Financial Monitoring Service), of the tax authorities, and of other federal executive authorities empowered by the Government of the Russian Federation. The fines for these administrative violations are from 30 thousand to 40 thousand Rubles for executives, and from 100 thousand to 500 thousand Rubles for legal entities.
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