December, 2016: Obligation of legal entities to receive, keep and disclose information on their beneficial owners
Article 6.1. of the Federal Law of 07.08.2001 No. 115-ФЗ “On Struggling against Money Laundering and Terrorism Financing” (hereinafter—the Federal Law), sets out that since December 21, 2016, the obligations on legal entities to disclose the information on their beneficial owners, that is on the individuals who eventually, directly or indirectly, own (have more than 25% of interest in the capital) the legal entity, or have the ability to control the latter’s activities. All legal entities will be required to have the information on their beneficial owners and store it for at least five years from the date of receipt. The information on the beneficial owners should be updated at least once a year.
We note that since the entry into force of the Federal Law of 23.06.2016 No. 215-ФЗ “On Amending the Federal Law “On Struggling against Money Laundering and Terrorism Financing” and the Code of the Russian Federation On Administrative Offences”, all legal entities duly registered in the Russian Federation and/or operating in the territory of the Russian Federation, with the exception of the persons listed below, should be required to have information on their beneficial owners, and take steps that shall be reasonable and accessible in the relevant circumstances in order to establish the following information on their beneficial owners:
- surname, name and patronymic (unless otherwise provided for by law or a national custom);
- date of birth;
- details of an ID;
- data of the migration card, of a document confirming the right of a foreign citizen or a stateless person to stay (reside) in the Russian Federation;
- place of residence (registration) or a place of stay;
- INN (Taxpayer’s Identification Number) (if available), as well as other information allowing to confirm the above information;
In doing so, reasonable and accessible steps shall mean those procedures that are developed by the organisation on its own, and aimed at the detection and identification of its beneficial owners.
The Information on the beneficial owners of a legal entity shall be revealed in the latter’s statements in the cases and manner prescribed by the laws of the Russian Federation.
Legal entities are also required to submit the documented information on their beneficial owners or on the steps taken to establish the information stated above on their beneficial owners at the request of the tax authorities and other authorised bodies.
Failure to comply with the obligation to identify, submit, update and store the information on the beneficial owners shall be punishable under the Code of the Russian Federation On Administrative Offences. Article 14.25.1 of the said Code will provide for an administrative fine at the amount of RUB 30 thousand to RUB 40 thousand for officials, and administrative responsibility and a fine at the amount of RUB 100 thousand to RUB 500 thousand for legal entities.
The effect of the said Law shall not apply to the following legal entities (except where an authorised body submitted a special inquiry established by subclause 5 Article 7 of the Federal Law):
- public authorities, other government agencies, local self-governments and institutions under their jurisdiction, state non-budgetary funds, public corporations or organisations in which the Russian Federation, the Russian Federation subordinate entities or municipalities have more than 50 percent of shares (interests) in the capital;
- international organisations, foreign states or political subdivisions of foreign states having autonomous legal capacities;
- issuers of securities that are admitted to organised trading and disclose the information in accordance with the Russian laws on securities;
- foreign organisations whose securities were listed on a foreign stock exchange that is included into the list approved by the Bank of Russia;
- foreign entities without legal personality whose organisational form does not provide for a beneficial owner or a sole executive body.