Clarifications for corporate compliance procedures

On February 3, 2017, the Russian Federal Service for Financial Monitoring (hereinafter “Rosfinmonitoring”) issued an information letter regarding the procedure for companies disclosing information on their beneficiary owners.

The letter was issued in furtherance of the amendments to Federal Law No.115-FZ “On combatting money laundering and terrorism financing” dated August 7, 2001, which establish for legal entities the obligation to possess information on their beneficiary owners and to take measures necessary to identify them. Furthermore, legal entities were imposed the obligation to respond to queries from Rosfinmonitoring and the tax authorities, and provide information on the beneficiary owners or confirm that they have taken measures to identify them.

In its information letter, Rosfinmonitoring indicated that if a legal entity is unable to establish its beneficiary owner, queries sent to the company shareholders (or other controlling entities) and responses to such queries may serve as proof that proper measures on identifying the beneficiary owner have been taken.

Considering the position of Rosfinmonitoring, if it is impossible to establish the beneficiary owners of a legal entity, in order to minimize the risk of liability for not fulfilling the obligation to establish and provide information on beneficiary owners, we recommend ensuring that a written request is delivered to the legal entity’s shareholders (or other controlling entities), with a full list of information needed to identify the beneficiary owner, and that a response from the shareholders (or other controlling entities), is received and kept at the company.