Criminal liability for money laundering will be expanded to cover persons laundering money obtained through evasion of customs duties or taxes. Source: Lori / Legion Media
Russia’s investigators will be able to obtain statements on bank transactions and accounts held by companies and individual entrepreneurs, as well as data on operations, accounts, and deposits by individuals, only on the basis of a court order.
Russian President Vladimir Putin signed the amendment into law at the end of June. Both chambers of parliament had approved the bill.
Criminal liability for money laundering will be expanded to cover persons laundering money obtained through evasion of customs duties or taxes.
In addition, upon request, tax authorities will gain access to information on the accounts, deposits and bank transactions of entities, individual entrepreneurs and individuals.
Several amendments are intended to prevent illegal stashing of money abroad. The law also allows cash and non-documentary securities accounts held by individuals or legal entities suspected of terrorist activity to be frozen.
Banks or bank employees failing to comply with the rule will be punished with large fines or administrative sanctions.
The law is not Russian know-how. Passed at the insistence of the OECD and FATF, it generally follows similar laws in leading nations. For instance, investigators and police in EU countries can only gain access to data on bank accounts and transactions of suspects on the basis of court orders.
At the same time, basic data from tax authority databases (such as account numbers, dates of opening and holders’ names) in countries such as Germany are provided to financial authorities at their request.
Europe has been increasingly active in fighting tax evaders in recent years. Even Switzerland — stalwart of banking privacy — intends to tighten its laws and increase punishment for those who try to evade taxes in one way or another.
The bill caused a heated discussion in the State Duma, as some deputies saw it as paving the legal way for violation of banking privacy. Yet experts have assessed the amendments as generally positive.
According Andrei Movchan, managing partner of the investment company Trety Rim, “the law brings Russia closer to the entire civilized world.”
He believes the court order requirement would help protect companies and individuals from abuse by investigators, as it is extremely important for an independent authority to be in charge of providing access to bank data.
While Movchan sees merit in concerns expressed by critics of the law (that it would make it easier to “sink” a competitor by “setting” investigators on them), he still believes the law is needed, because there is another law — the one regulating the judiciary — that leaves room for competition abuse.
“The fact that we have yet to revise one law doesn’t mean that we shouldn’t pass another, progressive law,” the expert said.
According to Akhmat Glashev, partner at the law firm Yegorov Puginsky Afanasiev & Partners: “Many of the new regulations do, indeed, look progressive, as they regulate the rights and responsibilities of law enforcement agencies in more detail and have been adopted to comply with Russia’s obligations under international treaties. Yet some of the provisions could spawn execution issues locally.”
Even so, according to the expert, the new law increases the risk of abuses by tax authorities, which will now receive direct access to bank accounts of individuals suspected of tax evasion.
“Experience has shown that tax authorities almost always presume taxpayer guilt,” said Glashev. “There is also a threat of information leaking from the tax authorities.”
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