The Russian financial watchdog has provided guidance on factors that present increased risk of transactions being treated as money laundering or terrorism financing
Pepeliaev Group advises that the Russian Financial Monitoring Service (“Rosmonitoring”) has released its Information Letter No. 17 dated 2 August 2011 On factors in transactions, and in types of and terms for activity, that entail an increased risk of clients entering into transactions for the purposes of legalising (laundering) income received through criminal means, and the financing of terrorism.
The Information Letter lists 26 factors in transactions, and in types of and terms for activity, which, if present, increase the risk of such transactions (activity) being treated as legalising (laundering) income received through criminal means, and the financing of terrorism.
An increased risk arises among non-residents of the Russian Federation, persons performing transactions with monetary funds or other property solely through a representative acting under a power of attorney, or clients who have registered as individual entrepreneurs or legal entities less than a year ago which are involved in federal programmes or which have an equity interest in their issued capital owned by the state.
Among transactions entailing an increased risk are those associated with the intensive turnover of cash, as well as arranging and conducting gambling, the sale of cars, real estate, antiques and jewelry, as well as conducting business as a tour operator or travel agent.
The list compiled by Rosmonitoring is important for organisations that undertake transactions with monetary funds or other property and are obliged to undertake financial monitoring; most notably, this includes credit organisations, insurance and leasing companies, and professional securities market participants [1].
The list of indicators specified by Rosmonitoring is not exhaustive. Items may be added to it taking account of the particular features of the activity of the organisations listed, as well as the specifics of the transactions(operations) they undertake.
Recommendations:
We recommend that organisations undertaking operations with monetary funds or other property, as well as other persons, include in their internal supervisory rules the list adopted by Rosmonitoring.
Following the supervisory authority’s position will reduce the risk of being held administratively liable.
Pepeliaev Group’s experts are ready to provide services on issues of anti-money laundering legislation, currency regulation and currency control, preparing companies and their officers and employees for audits from the state control (supervisory) and municipal control authorities, providing support services when control measures are taken, representing companies and their employees in administrative offence proceedings and before administrative and judicial authorities.
[1] See article 5 of Federal Law No. 115-FZ On counteracting the legalisation (laundering) of income received through criminal means, and the financing of terrorism.
For further information, please contact:
in Moscow – Elena Ovcharova, Head of the Administrative Defence of Business Group, at (495) 967-00-07 or by e-mail; Natalia Travkina, Senior Associate, at (495) 967-00-07 or by n.travkina@pgplaw.ru
in St Petersburg - Sergey Spasennov, Partner, Head of St. Petersburg office, at (812) 640-60-10 or by e-mail