Russia

Last updated: 25/05/2010

CENTRAL AUTHORITY FOR REPORTING

English: Federal Financial Monitoring Service (Rosfinmonitoring).

Russian:, www.fedsfm.ru.

Rosfinmonitoring is responsible for the following functions:

  1. General regulation and coordination of anti-money laundering activity;

  2. Gathering and analysis of reports of suspicious transactions and other information;

  3. Transfer of collected data and analysis to the appropriate law enforcement authorities for further investigation and action;

  4. Direct anti-money laundering control for certain categories of organizations.

OTHER ANTI-MONEY LAUNDERING REGULATOR(S) [1]


ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?

Yes. The Anti-Money Laundering Law (as defined below) includes advocates, notaries and legal services providers ("Lawyers") in the categories of professionals that are subject to the anti-money laundering special rules.


LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Russian anti-money laundering legislation involves a significant number of regulations; however only some of these expressly apply to Lawyers.

  • Federal Law No. 115-FZ on Counteraction of Legitimization (Laundering) of Proceeds of Crime and Financing of Terrorism, dated 7 August 2001 (the "Anti-Money Laundering Law") is the main anti-money laundering law.

    It provides anti-money laundering requirements which apply to organizations which carry out operations involving monetary resources or other assets, such as, for example, banks and credit organizations, professional participants in the securities market, insurance companies, leasing companies, federal postal organizations ("Regulated Persons").

    Lawyers are not specifically included as a Regulated Person; however Article 71 of the Anti-Money Laundering Law expressly applies to Lawyers.

The Anti-Money Laundering Law is complemented by the following regulations:

  • Resolution No. 82 of the Government of the Russian Federation on Approval of the Regulation for Submitting Information to the Federal Financial Monitoring Service by Advocates, Notaries and Legal or Accounting Services Providers, dated 16 February 2005 ("Resolution No. 82");

  • Order No. 245 of the Federal Financial Monitoring Service on Approval of the Instruction for Submitting Information to the Federal Financial Monitoring Service under the Anti-Money Laundering Law, dated 5 October 2009 (effective from 21 March 2010) ("Order No. 245");

  • Resolution No. 307 of the Government of the Russian Federation on Approval of Regulations on the Federal Financial Monitoring Service, dated 23 June 2004;

  • Resolution No. 6 of the Government of the Russian Federation on Procedure of Approval of Internal Control Regulations in Organizations Performing Operations with Monetary Funds and Other Assets, dated 8 January 2003;

  • Instruction No. 983-r of the Government of the Russian Federation on Recommendations on Working out by Organizations Performing Operations with Monetary Funds and Other Assets of Internal Control Regulations for the Purpose of Counteraction of Legitimization of Proceeds of Crime and Financing of Terrorism, dated 17 July 2002 ("Instruction No. 983-r");

  • Resolution No. 715 of the Government of the Russian Federation on Qualifying Requirements for Special Officials Responsible for Compliance with Rules of Internal Control and Programs to Ensure its Performance as well as Requirements for Personnel Training and Development, Identification of Clients, Beneficiaries for the Purposes of Counteraction of Legitimization of Proceeds of Crime and Financing of Terrorism, dated 5 December 2005 ("Resolution No. 715");

  • Letter No. 07-03-32/520 of the Ministry of Finance of the Russian Federation on Application of Legislation of the Russian Federation on Counteraction of Legitimization of the Proceeds of Crime and Financing of Terrorism in the course of Auditing Activity, dated 13 April 2009;

  • Order No. 256 of the Federal Service for Financial Monitoring of the Russian Federation on Requirements for Personnel Training and Development in Organizations Performing Operations with Monetary Funds and Other Assets for the Purposes of Counteraction of Legitimization of Proceeds of Crime and Financing of Terrorism, dated 1 November 2008;

  • Order No. 104 of the Federal Committee for Financial Monitoring of the Russian Federation on Approval of the Guidance for Particular Provisions of the Rules of Internal Control Developed by Organizations Performing Operations with Monetary Funds and Other Assets for the Purposes of Counteraction of Legitimization of Proceeds of Crime and Financing of Terrorism, dated 11 August 2003 "Order No. 104");

  • Resolution No. 245 of the Government of the Russian Federation on Approval of Regulation for Submitting Information to the Federal Financial Monitoring Service by Organization Performing Operations in Monetary Funds or Other Assets, dated 17 April 2002;

  • Resolution No. 28 of the Government of the Russian Federation on Approval of Regulation on Compulsory Registration with Federal Financial Monitoring Service of Organizations Performing Operations with Monetary Funds and Other Assets at Spheres which are not Controlled by Oversight Bodies, dated 18 January 2003;

  • Order No. 103 of the Federal Service for Financial Monitoring of the Russian Federation on Approval of Recommendations on Developing the Criteria for Revelation and Definition of the Unusual Transactions' Features, dated 8 May 2009;

  • Order No. 131 of the Federal Service for Financial Monitoring of the Russian Federation on Approval of Regulation on Procedure for Monitoring by the Federal Service for Financial Monitoring of Compliance with Anti-Money Laundering Law by Organizations Performing Operations with Monetary Funds and Other Assets at Spheres which are not Controlled by Oversight Bodies, dated 23 May 2008; and

  • Information Letter No. 8-T of the Central Bank of the Russian Federation on Application of the Article 7 (1.3) of the Federal Law on Counteraction of Legitimization of Proceeds of Crime and Financing of Terrorism, dated 18 January 2008 (Information Letter No. 8-T). [2]?

Of these regulations, only Resolution No. 82 and Order No. 245 expressly impose anti-money laundering obligations on lawyers.

Russia is also a party to the following international treaties covering anti-money laundering issues:

Russia is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, dated 21 November 1997.

The requirements of international treaties are beyond the scope of the present guidance and are mentioned for information only.


ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Visiting lawyers, to the extent they are lawyers, are subject to local anti-money laundering laws.


LIST ANY ANTI-MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

Lawyers who are registered as "advocates" should comply with the rules of a bar association of which they are members of as well as the rules of the Federal Chamber of Advocates of the Russian Federation (the "Federal Chamber of Advocates").

However, there is no equivalent body which applies to lawyers who are not advocates, such as a law society.

The Federal Chamber of Advocates has issued a number of guidelines which apply to advocates only, for example, the following:

  • Advocates' Professional Code of Ethics, enacted by the First All-Russia Congress of Advocates, dated 31 January 2003 (Advocate's Code of Ethics) (16) (this document is binding upon all advocates in Russia, however it contains no provisions directly dealing with anti-money laundering issues and only applies to the extent it prevents advocates from following their clients' instructions because of a violation of law);

  • Recommendations on Organization of Advocates' Compliance with Legislative Requirements on Counteraction of Legitimization of Proceeds of Crime and Financing of Terrorism, enacted by the Council of the Federal Chamber of Advocates of the Russian Federation, dated 27 September 2007 (protocol No. 2);

  • Decision of the Council of the Federal Chamber of Advocates Federation, dated 23 June 2005 (protocol No. 2); and

  • Cooperation Agreement No. 01-1-13/11 between the Federal Service for Financial Monitoring of the Russian Federation and the Federal Chamber of Advocates of the Russian Federation on Counteraction of Legitimization of Proceeds of Crime and Financing of Terrorism, dated 12 July 2007.

Notaries should comply with the rules of the regional notarial chambers of which they are members of as well as the rules of the Federal Notarial Chamber. Some of the regional notarial chambers have issued their rules of anti-money laundering internal control. However no such federal rules binding over all the notaries appear to exist.


IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

No. Members of the legal profession do not have a duty to supervise or enforce anti-money laundering regulations.


DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

Lawyers must undertake certain due diligence if they prepare or carry out on behalf of a client, at the client's request, the following transactions (regardless of the value of the transaction):

  1. Transactions with immovable property;

  2. Management of cash funds, securities or other assets of the client;

  3. Management of bank accounts or securities accounts;

  4. Raising funds for the creation, operation and management of companies; and

  5. Creation, operation or management of legal entities, as well as the sale and purchase of legal entities.

Under Articles 7 and 71 of the Anti-Money Laundering Law, Lawyers should carry out the following due diligence:

  1. To identify a client by obtaining and verifying the following formation:

    1. For individuals – surname, name, patronymic name (unless otherwise required by law or national custom), citizenship, data taken from a personal identification document, data taken from a migration card (if applicable) and a document confirming the right of a foreign or stateless person to reside in Russia, the registered residential address, and taxpayer's identification number;

    2. For legal entities – name, taxpayer's identification number or code of a foreign organization, state registration number, place of registration and address.

  2. To put into place internal controls: develop rules of internal control [3] and programs to ensure their performance, appoint officers responsible for compliance with them, as well as to take other internal organizational measures for these purposes, record information obtained, [4] and preserve its confidential character; and

  3. To keep records and safe-keep documentation: documents containing client identification data must be kept for not less than five years from the date of termination of relations with the client.

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Yes. Russia follows a risk-based approach to client due diligence by lawyers.

Lawyers are required to carry out certain due diligence to identify their clients. The identification requirements may vary depending on the level of risk of anti-money laundering operations carried out by a client (Article 7.2 of the Anti-Money Laundering Law).

The Anti-Money Laundering Law requires Lawyers to develop rules of internal control and programs to ensure their performance, and recommends that risk assessment programs form part of these programs. Lawyers should assess the risks of their clients' anti-money laundering activity based on information obtained in the course of the due diligence to identify clients.

Rosfinmonitoring has developed certain criteria for risk assessment. If the risk is assessed as high, greater attention should be paid to a client's operations (Items 2.1.3, 2.4, 2.5, Supplement 4 to Order No. 104; Items 6, 14 of Instruction No. 983-r; Item 4 of Resolution No. 715).


ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Regulated Persons are required to take enhanced due diligence measures for certain types of clients. Because these measures are not expressly stated to apply to clients of Lawyers, it is unclear whether Lawyers are also subject to these enhanced measures.

Regulated Persons which provide services to foreign public officials are required to take additional due diligence steps (Article 7.3 of the Anti-Money Laundering Law). A foreign public official is a politically exposed person as provided in the Money Laundering Glossary to the 40 Recommendations enacted by the Financial Action Task Force (FATF), Wolfsberg Clarifications on Politically Exposed Persons and the directives of the Commission of the European Communities and the European Parliament and Council.

As a general rule, such clients can only be accepted on the basis of a written decision of the director of the Regulated Person, who is also responsible for regularly updating the identification information obtained about foreign public officials.

Regulated Persons involved in providing services to foreign public officials are obliged to take reasonable and practicable measures to identify such persons among their current or proposed clients, and to identify the origin of their assets. Regulated Persons are also required to pay close attention to transactions made by or on behalf of their spouses or relatives of foreign public officials.


ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

No. Russian anti-money laundering legislation does not provide for simplified due diligence requirements with regard to any types of clients.


ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

No. Lawyers are not permitted to rely on third party due diligence, and are required to collect the required data directly from their clients.


WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Lawyers are required to report their clients' transactions to Rosfinmonitoring if they suspect such transactions are performed or may be performed with the purpose of legalizing income gained by criminal means or for financing terrorism ("suspicious transactions").

Such reports should be made no later than one business day following the day of identification of the suspicious transaction. An advocate and a notary may submit such information both independently and through corresponding advocates' and notaries' chambers if such chambers have concluded agreements on cooperation with Rosfinmonitoring (Item 3 of Resolution No. 82; Order No. 245).

The report can be made either by way of submission of a hardcopy document signed by the respective Lawyer (or representative of the law firm) and affixed with the seal (if any) or by email signed with an electronic digital signature submitted via encrypted software provided by Rosfinmonitoring.

The report should include information necessary for the client's identification, type of transaction and grounds for its settlement, date and the amount of the transaction, as well as the circumstances which give reason to believe that the transaction is carried out for the purpose of laundering of the proceeds of crime or financing of terrorism.

Templates for reports of suspicious transactions are provided in Order No. 245.

The above-mentioned provisions do not apply to information covered by attorney-client privilege Federal Law No. 63-FZ on Advocacy Activity and Advocacy in the Russian Federation, dated 31 May 2002 (the "Advocacy Law").


DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

Yes, but to a limited extent only.

The Advocacy Law respects attorney-client privilege. Advocates are not required to report information covered by attorney-client privilege, which includes any and all information relating to an advocate's legal advice to a client (Article 8.1 of the Advocacy Law; Article 71 of the Anti-Money Laundering Law).

All other categories of Lawyers are not covered by this exception.


DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

No. Russian anti-money laundering legislation does not provide for criminal and/or civil indemnity to a lawyer who has reported a suspicious transaction.


ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

Regulated Persons are covered by a special rule relating to transactions of clients allegedly implicated in extremist activities or terrorism. If Regulated Persons are in receipt of such information, they must suspend their service to clients for two business days from the date on which the clients' instructions should have been executed, and inform Rosfinmonitoring not later than one business day following the day of the suspension.

If the transaction is not further suspended by Rosfinmonitoring within the specified period, the Regulated Person may proceed with carrying out its client's instructions, unless another restricting decision is made (Article 7.10 of the Anti-Money Laundering Law).

It is unclear whether this requirement applies to Lawyers.


IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

Yes. Lawyers are prohibited from informing their clients on the suspicious transactions reports (Article 71of the Anti-Money Laundering Law).


DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

Generally there are no direct restrictions on accepting a new client. However, advocates are prohibited from accepting a new client or matter if the services sought are for an obviously illegal nature (Article 6.4 of the Advocacy Law).


ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

Yes, however these requirements are not applicable to Lawyers.

Under Article 7.1 of the Anti-Money Laundering Law and Item 2 of Order No. 104, Regulated Persons are obliged to regularly update information on their clients not less than annually in the case of high risk anti-money laundering activities of their clients, and not less than once every three years in all other cases.


DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

Under Article 13 of the Anti-Money Laundering Law, infringements of this law result administrative, civil and criminal liability.

  1. Administrative Liability.

    Under Article 15.27 of the Code of Administrative Offences of the Russian Federation, violation of the anti-money laundering legislation will result in the following administrative fines:

    1. On officers, a fine in the range of 10 thousand roubles – 20 thousand roubles; and

    2. On legal entities, a fine in the range of 50 thousand roubles – 500 thousand roubles, or administrative suspension of the activity for a term of up to 90 days.

  2. Criminal Liability.

    Under Article 174 of the Criminal Code of the Russian Federation, participation in financial transactions and other transactions with monetary funds or other property knowingly acquired by other persons illegally for the purpose of bringing the appearance of legality to the possession, use and disposal of such monetary funds or other property is punishable, depending upon the type and severity of the crime, by:

    1. Fines in the amount of up to 120 thousand roubles or in the amount of the salary or any other income of the convicted person for a period of up to one year;

    2. Fines in the amount of between 100 thousand and 300 thousand roubles, or in the amount of the salary or any other income of the convicted person for a period of one to two years;

    3. Imprisonment for a period of up to 4 years with or without a fine of up to 100 thousand roubles or in the amount of the salary or other income of the convicted person for a period of up to 6 months;

    4. Imprisonment for a period of 4-8 years with or without a fine of up to 1 million roubles or in the amount of the salary or other income of the convicted person for a period of up to 5 years;

    5. Imprisonment for a period of 7-10 years with or without a fine of up to 1 million roubles or in the amount of the salary or other income of the convicted person for a period of up to 5 year.

  3. Disciplinary Liability (applicable to advocates only).

    Violation of anti-money laundering requirements by advocates may also lead to disciplinary measures, including termination of the advocate's status (Article 17.2 of the Advocacy Law; Articles 10.1, 18 of the Advocate's Code of Ethics).

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

There is no publicly available information on the prosecution of Lawyers involved in anti-money laundering activities.

According to the FATF mutual evaluation report on Russia dated June 2008, no actual sanctions have been applied in respect of advocates or legal services providers. However, sanctions have been applied in respect of notaries for breach of the identification requirement, but it is not possible to ascertain whether this had been strictly speaking the result of a breach of the requirements of the Anti-Money Laundering Law, or of the more general notary requirements.


HAS THE FINANCIAL ACTION TASK FORCE (FATF) OR A FATF-STYLE REGIONAL BODY CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

The FATF released a mutual evaluation report on Russia in June 2008. The report states that the anti-money laundering requirements for Lawyers in Russia are generally incomplete or not effectively implemented.

The report also expresses concern about the low numbers of suspicious transaction reports filed by lawyers, which may indicate whether the requirements of anti-money laundering regulations are understood (Items 35, 39 - 40, 608 - 625 of the FATF Second Mutual Evaluation Report, Anti-Money Laundering and Combating the Financing of Terrorism, Russian Federation, 20 June 2008).



Information provided by:

Vera Ivchenkova
Associate
vivchenk@dl.com  

Vasilisa Strizh
Partner
vstrizh@dl.com  

Dewey & LeBoeuf
Nikitsky Pereulok, 5
125009 Moscow
Russia
www.dl.com


Notes

  1. Only governmental authorities are mentioned in the present guidance. Non-commercial and non-governmental organizations are not covered by it.

  2. Some of the above mentioned regulations are available from the Rosfinmonitoring official web-site www.fedsfm.ru.

  3. Among other things, the internal control rules should include criteria for the detection of unusual transactions developed in accordance with general criteria specified in Rosfinmonitoring's Order No. 103 as well as criteria developed in view of the particular characteristics of the respective Lawyers' activity.

  4. The following shall constitute grounds for recording information (Article 7.2 of the Anti-Money Laundering Law):

    • The complex or unusual nature of a transaction which does not have any obvious economic sense or any obvious legal purpose;

    • The non-conformity of a transaction to the goals of client’s activities as established by its foundation documents;

    • The detection of the conclusion of repeated operations or transactions the nature of which gives reason to believe that they are carried out for the purpose of evading anti-money laundering control;

    • Other circumstances which give reason to believe that transactions are carried out for the purpose of laundering of the proceeds of crime or financing of terrorism.

Disclaimer

This guide is intended only as a general discussion of anti-money laundering issues. The views expressed hereunder are those of the above mentioned authors and not of the firm. It is not considered to be legal advice. We would be pleased to provide additional details or advice about specific situations. For additional information on this topic, please feel free to call upon your Dewey & LeBoeuf relationship partner. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent. Dewey & LeBoeuf retains the right to reproduce this guide in whole or in part on the websites, in client mailings and (or) other publications. The documents available online and containing legislation mentioned in this guide are provided by Consultant Plus centralized database (http://www.consultant.ru). Please note that it cannot be guaranteed that they are exact reproductions and officially adopted texts. As laws are constantly changing, we cannot guarantee the correctness of information contained thereof as of the current day. 

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