Disclosure of beneficial ownership information: obligations and risks
Russian companies are obliged to keep information about their beneficial owners (both Russian and foreign) and to provide this information to banks and state authorities on request. Failure to provide information may result in the freezing of accounts and fines.
Who is a beneficial owner?
A beneficial owner is a natural person who ultimately directly or indirectly (via third parties)
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owns more than 25 per cent of the shares of the company, or
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has the ability to control the actions of the company.
A company may have one or more beneficial owners.
What are the consequences of not providing information?
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The bank may refuse to open an account with a company that has not provided this information;
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refusal by the bank to honour the company's instruction to carry out a transaction on its account, which means that the company cannot use the account for its day-to-day business;
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risk of the company being held administratively liable in accordance with Article 14.25.1 of the Code of Administrative Offences of the Russian Federation, which provides for the following liability for failure to comply with the obligation to prepare, update, store and submit information on beneficial owners:
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for companies - a fine of up to RUB 500,000;
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for the sole executive body of a company (general director) – a fine of up to RUB 40,000 or debarment for a period of up to one year.
What should be done?
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Obtain the beneficial ownership information from the participants and update this information at least once a year. Document the correspondence (Article 6.1 of Federal Law No. 115 "Money Laundering Act").
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Keep the information on the beneficial owners and the information on the measures taken to identify them for at least 5 years from the date of their receipt.
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