Russia

Last updated: 31/7/2008

CENTRAL AUTHORITY FOR REPORTING

Russian:
English: "Federal Financial Monitoring Service" (Rosfinmonitoring)

ARE LAWYERS COVERED BY MONEY LAUNDERING LEGISLATION?

Yes, Federal Law No. 115-FZ On Counteraction of Legitimization (Laundering) Proceeds of Crime and Financing of Terrorism, dated 07 August 2001, as amended (the "Anti-Money Laundering Law"), includes advocates, notaries and legal services providers in the categories of professionals that are subject to the anti-money laundering special rules.

LAWS REGARDING ANTI-MONEY LAUNDERING PROCEDURES

In addition to the Anti-Money Laundering Law there is additional implementation legislation, as follows:

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. 245 of the Government of the Russian Federation On Approval of the 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;
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 08 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 Regulations for the Purpose of Counteraction of Legitimization (Laundering) Proceeds of Crime and Financing of Terrorism, dated 17 July 2002;
Decree No.1263 of the President of the Russian Federation On the Authorized Agency on Counteraction of Legitimization (Laundering) of the Proceeds of Crime and Financing of Terrorism, dated 01 November 2001;
Letter No. 07-03-01/647 of the Ministry of Finance of the Russian Federation On Counteraction of Legitimization (Laundering) of the Proceeds of Crime and Financing of Terrorism, dated 27June 2005;
Information Letter No. 7 of the Central Bank of the Russian Federation On Consolidation of Practice of Application of the Anti-Money Laundering Law, dated 21 February 2005;
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;
Order No. 86 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 07 June 2005.

IN ADDITION TO THESE LAWS, IS THERE ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS CURRENTLY IN PLACE?

The following anti-money laundering legislative acts provide specific anti-money laundering guidance for advocates, notaries and legal services providers:

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;
Order No. 86 of the Federal Financial Monitoring Service on Approval of the Instruction for Submitting Information to the Federal Financial Monitoring Service under Anti-Money Laundering Law, dated 07 June 2005.

UNDER WHAT CIRCUMSTANCES IS A LAWYER UNDER THE OBLIGATION TO REPORT?

Advocates, notaries or legal service providers are required to report their suspicions to the Federal Financial Monitoring Service, if they have a reason to believe that any transaction or financial operation is performed or may be performed with the purpose of legalization (laundering) of criminally gained income or financing of terrorism. Such a report 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 the Federal Financial Monitoring Service.

The above-mentioned provisions do not apply to information covered by attorney-client privilege under Federal Law No. 63-FZ On Advocacy Services and Advocates in the Russian Federation, dated 31 May 2002; however, such attorney-client privilege does not cover legal service providers other than Russian advocates.

LAWYER RESPONSIBILITY/LIABILITY

Article 7.1 of the Anti-Money Laundering Law requires advocates, notaries and legal services providers to undertake the following compliance steps:

To identify a client;
To organize internal controls; and
To record and safe-keep documentation.

The above requirements apply to advocates, notaries and legal services providers if they prepare or fulfill on behalf, or at the request, of a client the following transactions:

Transactions with immovable property;
Management of cash funds, securities or other assets of the client;
Management of bank accounts or securities accounts;
Raising funds (attraction of financial resources) for the creation, operation and management of companies; and
Creation, operation or management of organizations, as well as the sale and purchase of organizations.
Only “suspicious” transactions are subject to reporting.

CLIENTS IDENTIFICATION AND VERIFICATION

Under Articles 7 and 7.1 of the Anti-Money Laundering Law advocates, notaries and legal services providers should undertake the following compliance steps:

To identify a client by obtaining and verifying the following formation:
1. Regarding individuals – surname, name, patronymic name (unless otherwise required by law or national custom), citizenship, data taken from the personal identification document, data taken from the migration card (if applicable) and a document confirming the right of the foreign or stateless person to stay (reside) in Russia, the address of residence (registration) or place of stay, and taxpayer's identification number;
2. Regarding legal entities – name, taxpayer's identification number or code of a foreign organization, state registration number, place of registration and address;
To organize internal controls: develop rules of internal control and programs to ensure its performance, appoint officers responsible for the observance of these rules and realization of these programs, as well as take other internal organizational measures for the indicated purposes, record the information obtained as a result of application of these rules and realization of the programs of internal control, and preserve its confidential character; and
To record and safe-keep documentation: keep the documents containing client identification data for not less than five years; this period commences on the date of the termination of relations with the client.

LAWYERS PROSECUTED FOR MONEY LAUNDERING OFFENCES

Under Article 13 of the Anti-Money Laundering Law, persons guilty of infringement of this law bear administrative, civil and criminal responsibility.

Under Article 15.27 of the Code of Administrative Offences of the Russian Federation No. 195-FZ, dated 30 December 2001, violation of the legislation on counteraction of legitimization (laundering) proceeds of crime and financing of terrorism will result in the following administrative fines:

On officers at the rate of 10 thousand roubles – 20 thousand roubles; and
On legal entities fines at the rate of 50 thousand roubles – 500 thousand roubles or an administrative suspension of the activity for a term of up to 90 days.

Under Art. 174 of the Criminal Code of the Russian Federation No. 63-FZ, dated 13 June 1996, 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 said monetary funds or other property is punishable, depending upon the type and severity of the crime, by:

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 the period of up to 1 year;
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;
Imprisonment for a period of up to 4 years with or without a fine of up to 100 thousand or in the amount of the salary or other income of the convicted person for a period of up to 6 months;
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;
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 years.

HAS THE FINANCIAL ACTION TASK FORCE (FATF) 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 the executive summary of its latest mutual evaluation report on Russia in June of 2008. The report states that the AML/CFT requirements for lawyers in Russia are generally incomplete or not effectively implemented. The report also expresses concern about the low numbers of STR’s filed by lawyers, which may indicate whether the requirements of Russia’s AML/CFT laws are understood.

Please click here to see the report.

Information provided by:

Vasilisa Strizh
Partner
Dewey & LeBoeuf
Nikitsky Pereulok, 5
125009 Moscow
Direct: +7 495 737 5140
General: +7 495 737 5050
vstrizh@dl.com
www.dl.com