The experts of the Credinform information agency have analyzed new legislative acts on changes of doing business. A significant turning point was in ensuring the reliability of information submitted at the state registration of legal entities and individual entrepreneurs; notifications by Russian citizens and corporate entities about existence of foreign assets; disclosure of information on experts in leadership positions by financial institutions; informing the business about the results of inspections conducted by the state authorities. Let us dwell on the major innovations. 

The Federal law №67-FZ as of March 30, 2015 has amended the separate legislative acts of the RF. The content of its main provisions is to ensure the reliability of information submitted at the state registration of legal entities and individual entrepreneurs. The Criminal Code of the Russian Federation establishes responsibility for entering the information about front parties into the Unified State Register of Legal Entities (EGRUL). In general, the law is aimed at preventing the creation of firms registered on front parties.

From January 1 to July 15, 2015 more than 254 th. new organizations were registered in Russia; 498 th. in 2014, 484 th. in 2013.
*According to the Information and analytical System Globas-i.

The Federal law on controlled foreign corporations (CFC) was adopted in November 2014 and came into force since January 1, 2015. The law stipulates that Russian citizens and corporate persons having foreign assets (stocks, shares in foreign companies, trusts, funds) of 10% and more should notify the Federal Tax Service before April 1, 2015. In late March, it was decided to postpone this deadline to June 15, 2015. It was assumed that firstly a law on amnesty has to be passed. According to the lawyers, the amnesty did not affect the decision of the owners to disclose information.

By June 15, 2015, the Federal Tax Service has received 3 858 notifications (1 004 from legal entities and 2 199 from individuals); that is less than 4% of total number of companies holding foreign assets. There are totally more than 4.6 mln. active companies in Russia.
*The System Globas-i.

In its designation as of May 19, 2015 the Central Bank of the Russian Federation defined the procedure for disclosure in the Internet of information on the credit organization’s management - members of the board of directors, officers, deputies, accountants and others. According to the document the following information should be disclosed: name, surname, patronymic; position; election (re-election) date to the Board of Directors (Supervisory Board); arrangement date and actual appointment (election, re-election) for the position; information about primary and secondary education; information on scientific degree, academic rank; employment history; other information about the qualifications and work experience.

Prior to July 1, 2015 less than half of the 30 audited credit institutions took up new obligations. Main defaulters are small banks, although those from the largest top-10.
*Open mass media.

In the Decree №415 as of April 28, 2015 the Russian Government determined the rules of the formation and maintenance of the Unified register of inspections. The register contains information about scheduled and unscheduled inspections of legal entities and individual entrepreneurs, including: information on the inspection, inspection bodies, inspected entity, notification of the inspected entity, abolition of the inspection results, and other. The most important point is information about the inspection results and the measures taken following the inspection. This Decree entered into force on July 1, 2015. The provisions for the inclusion of inspection data under the state control (supervision) will be applied from July 1, 2016, and since July 1, 2017 under the municipal control.

In 2014 the FTS of the RF conducted more than 32.9 mln. on-site and desk audits of organizations and individual entrepreneurs, following the 1Q 2015 - more than 6.83 mln. In 2014 the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing (Rospotrebnadzor) carried out more than 299 th. audits of legal entities and individual entrepreneurs, including the planned 117 th. For 2015 Rosportebnadzdor has registered more than 94 th. inspection of legal entities and individual entrepreneurs.
* Authorities' data.

In May 2015 the Constitutional Court declared illegal the provision allowing the tax office to exclude automatically the company declared bankrupt from the register. The Court in its ruling stated that extrajudicially termination of the debtor’s legal capacity by the administrative authority leads to the inability to recover debt from a bankrupt company and therefore unreasonably restriction the creditor’s rights to judicial protection.

From January 1 to July 1, 2015 more than 4,5 th. and more than 5,9 th. companies in Russia in the relevant period of 2014 were declared bankrupt. *The System Globas-i.

In the future the changes in the institute of individual entrepreneurship should be expected. Only IEs working without the right to hire will be kept, and all the rest will be transferred to the category of small enterprises. A large number of workers will increase the tax burden on enterprise: it should not be more than 100 employees at the simplified tax system, and not more than 15 at the patent system. It is expected that the amendments to the legislation will be introduced to the State Duma this year fall. The interdepartmental working group consisting of representatives of the Ministry of Finance, Ministry of Labor, Federal Tax Service and NGOs acts at this stage and has already analyzed the proposals. In general, the panelists agreed to follow the path of the IE special status.

As of July 15, 2015 more than 3.5 mln. IEs acts in Russia. * The System Globas -i.

In June 2015 at the St. Petersburg international economic forum the President of the RF has stated about the policy on creating the favorable environment for conducting business, such as: to fix tax rates in the next four years, introduce tax holidays for IEs, significantly reduce the fiscal burden on small and medium-sized businesses within special tax regimes, provide tax benefits for new industries (greenfields) and other.
On July 27 The Ministry of Finance issued a document tax policy on main directions until 2018. The Government of the Russian Federation and the State Duma’s anti-crisis measures, taking into account the message of the President are also aimed at stimulating economic activity by reducing the tax burden for entrepreneurs.
The Information and analytical System Globas-i updates counterparties checks algorithm in view of the amendments and new requirements on disclosing.

What is meant by beneficial ownership and beneficial owner?

The fight against financial crime, both in the world and in Russia in particular, gets worse year by year.

The outflow of capital from Russia, according to estimates of the Central Bank of the RF for 2014, amounted to more than 150 bln USD, compared to 61 bln USD in 2013. It is no secret, that significant financial resources are deposited overseas on bank accounts of individuals and legal entities, often with the use of illegal or "gray" schemes. In this context, issues of determination and verification of beneficial owners becomes more and more actual.

The efforts of the international community in this direction took shape in the establishment of the Financial Action Task Force on Money Laundering (FATF), which had been formed at the initiative of the "Big Seven" countries in 1989. The Group FATF includes 34 countries and 2 international organizations now.

In 2000 the Wolfsberg Group was organized, which joined together the world's largest banks: Banco Santander, Bank of America, Bank of Tokyo-Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan Chase, Société Générale, Standard Chartered Bank, UBS.

In 2012 the Group FATF recommended "International standards for combating money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction" to practical application for credit organizations. These standards determine the reasonable measures to verify beneficial owner, concretized in October 2014 by a special guide of FATF - "Transparency and beneficial ownership", the description of possible ways to hide the information on beneficial ownership, the interpretation of the concept "beneficial owner" and recommendations for the detection of the beneficial owners.

In May 2012 the Wolfsberg Group published the "Comments on questions of the determination of beneficial ownership, arising in the process of application of the principles of Wolfsberg Anti-Money Laundering Principles for Private Banking".

In its most general form, the main principles of determination and adequate verification of beneficial owners in order to counteract the legalization (laundering) of income received by criminal way, which are specified by above-mentioned documents, can be formulated as follows:

  • beneficial owner is a natural person, who, whether through the ownership or on other grounds, ultimately controls funds on a bank account;
  • beneficial ownership must be established for all bank accounts;
  • adequate verification in this or that volume is required, it is carried out in any case and regardless of the requirements of national laws on disclosure of information concerning companies;
  • ultimate purposes of the adequate verification are to detect disparity of the information collected by opening of an account and identify an initial primary source of funds in the bank account, i.e. a source of wealth, among them to make connections of a natural person in ownership and management structures of legal entities.

By letter of the Bank of Russia from 02.06.2015 N 014-12-4 / 4780 "On issues of definition of beneficial owners" it was explained that to identify the beneficial owners of clients by transactions with funds or other property, in accordance with the Federal Law from 07.08.2001 N 115 FZ "On counteraction to legalization (laundering) of income received by criminal way, and financing of terrorism", credit and financial institutions may use recommendations from the mentioned documents of FATF and the Wolfsberg Group.

With the help of the Information and analytical system Globas-i® it is possible to verify the ownership and management structure of legal entities in Russia, and also to order such information on foreign companies.