14. Rosfinmonitoring issued an Order No. 203 dated 03.18.2010 ...

|EAG-VI |[pic] |EAG/FR(2010) 6 | FIRST MUTUAL EVALUATION OF THE RUSSIAN FEDERATION Second follow-up report
on the Implementation of Recommendations of the EAG Mutual Evaluation I. INTRODUCTION 1. The purpose of this document is to present to the EAG Plenary Meeting
the second follow-up report, which describes the measures taken by the
Russian Federation to remedy the deficiencies revealed in the course
of the mutual evaluation. The EAG Plenary approved the first follow-up
report in December 2009 and requested Russia to present the second
follow-up report by December 2010. 2. In relation to the FATF Core and Key Recommendations, the Russian
Federation was rated "Partially Compliant" for Recommendation 5
(Customer Due Diligence), Recommendation 23 (Regulation, Supervision &
Monitoring), Recommendation SR.III (Freeze and Confiscate Terrorist
Assets), Recommendation SR.IV (Suspicious Transaction Reporting). As a
result of these ratings and in accordance with the item 41 of the EAG
Mutual Evaluations Procedures (EAG/PLEN (2007) 4 rev.4) the Russian
Federation fell under the procedure of regular monitoring. Russia was
rated as 'partially compliant' and 'non-compliant' for 24
Recommendations as follows. |Partially compliant (PC) |Non-compliant (NC) |
| | |
|R.5 Customer Due Diligence |R.22. Foreign Branches & |
|R.6 Politically Exposed Persons |Subsidiaries |
|R.7 Correspondent Banking |SR.VI AML Requirements for |
|R. 8 New Technologies & Non |Money/Value Transfer Services |
|Face-to-Face Business |SR.IX Cross-Border Declaration & |
|R. 11 Unusual Transactions |Disclosure |
|R. 12 DNFBP - R.5, 6, 8-11 | |
|R. 14 Protection & No Tipping-off | |
|R. 15. Internal Controls, Compliance| |
|& Audit | |
|R. 16. DNFBP - R.13-15 & 21 | |
|R. 17. Sanctions | |
|R. 21. Special Attention for Higher | |
|Risk Countries | |
|R. 23. Regulation, Supervision & | |
|Monitoring | |
|R. 24. DNFBP - Regulation, | |
|Supervision & Monitoring | |
|R. 25. Guidelines & Feedback | |
|R. 29. Supervisors | |
|R. 30. Resources, Integrity & | |
|Training | |
|R. 33. Legal Persons - Beneficial | |
|Owners | |
|SR.III Freeze and Confiscate | |
|Terrorist Assets | |
|SR.IV Suspicious Transaction | |
|Reporting | |
|SR.VII Wire Transfer Rules | |
|SR.VIII Non-Profit Organisations | | 3. The first follow-up report of the Russian Federation was considered
and at the 11th EAG Plenary. The discussion of the follow-up report of
Russia in December 2009 revealed certain progress in compliance with
the financial Recommendations (R5, R6, R12, R15, R.25, R.29). It was
also noted that particular progress was achieved in regulation, in
particular draft laws were developed that affect the following FATF
Recommendations: 5, 7, 12, 17, 21, 22, 23.
II. OVERVIEW OF PROGRESS MADE BY THE RUSSIAN FEDERATION SINCE DECEMBER 2009
4. This section highlights the most significant steps that were taken by
the Russian Federation since December 2009 in order to correct the
deficiencies revealed in the course of the mutual evaluation. These
measures are set out in more detail in Annex 2. General Context 5. During the reporting period (since December 2009), the Russian
Federation has amended the AML/CFT legislation, in particular:
. Federal Law No. 115-FZ On Combating Legalisation (Laundering) of
Proceeds from Crime and Financing of Terrorism (AML/CFT Law);
. Law of the Russian Federation No. 4015-1 "On Organization of Insurance
Business in the Russian Federation";
. Federal Banking Law No.395-1;
. Federal Law No.244-FZ "On State Regulation of Activities Related to
Organization and Carrying Out Gambling, and Regarding Introduction of
Amendments to Some Legislative Acts of the Russian Federation";
. Russian Federation Code on Administrative Offences
. Criminal Code of the Russian Federation
. Customs Code of the Russian Federation 6. These laws are generally aimed at further harmonization of the Russian
legislation and bringing it into line with the AML/CFT international
standards. In particular, in accordance with these amendments the new
definitions of the terms "beneficial owner" and "identification" were
introduced. Moreover, according to the amendments to the Russian
Federation Code on Administrative Offences the supervisory bodies are
now empowered to apply new sanctions for the AML/CFT Law violations.
Changes that have been made into these laws have increased the level
of Russia's compliance with criteria of R.5, 12, 15, 17, 21, 22, 23,
25 and SR.II. Core Recommendations (R. 5, SR. II) Recommendation 5 (Customer Due Diligence) 7. In order to further improve the efficiency of the identification
procedures the Federal Law No.176-FZ "On Amendments to the Federal Law on
Combating Legalization (Laundering) of Proceeds from Crime and Financing of
Terrorism and to the Russian Federation Code on Administrative Offences"
dated July 23, 2010 was adopted which introduced the following new
definitions:
"beneficial owner" refers to the proxy giver, grantor, principal,
trustor or other person for and (or) on behalf of, and (or) at the expense
of whom the customer (customer's representative) carries out transactions
with funds or other assets;
"identification" is a set of measures for obtaining information on
customers, their representatives, and beneficial owners required by the
Federal (AML/CFT) Law, verification of such information using original
documents and (or) duly certified copies thereof, and establishing that
such documents (or duly certified copies thereof) legitimately belong to
the persons who presented them. 8. In addition, according to the mentioned Law the date of birth of a
customer is added to the list of information to be ascertained for the
identification purposes, which allows to avoid confusion in case of similar
names. 9. The requirement on the identification of beneficial owners has been
expanded. Decree of the RF Government No.967-r requires that in the course
of identification of legal entities to pay special attention on the
following issues:
a) the list of the legal entity's founders (shareholders);
b) the structure of the legal entity's management bodies and their
powers;
c) the size of registered and paid-up authorized (share) capital or the
size of authorized fund and the value of assets of a legal entity. 10. In accordance with the given Law amendments have been made to item 5 of
Article 7 of the AML/CFT Law that prohibit financial institutions from
entering into a bank account (deposit) agreement with a client and/or a
client's representative in case there is a lack of necessary documents for
their identification as specified by the AML/CFT Law. 11. In general, it is worth mentioning the significant measures taken by
the Russian Federation on implementing R.5. Special Recommendation II (Criminalization for terrorist financing) 12. Shortcomings in the criminalization of terrorist financing specified in
the MER of the Russian Federation are eliminated by a newly adopted Federal
Law No.197-FZ. This Federal Law envisages that terrorist financing includes
financing of offences related to illegal actions with nuclear materials
(Articles 220 and 221 of the Criminal Code). Other Recommendations (R. 12, 15, 17, 21, 22, 23, 25) Recommendation 12 (DNFBPs - R.5, 6, 8-11) 13. Article 5 of the Federal Law No. 244-FZ (as amended on April 22, 2010)
directly prohibits organization and operation of gambling business via
informational and communicational networks, including the Internet, as well
as via communication facilities, including mobile communication facilities.
Thus the ban on internet-casinos' activity has been introduced. Recommendation 15 (Internal control, compliance and audit)
14. Rosfinmonitoring issued an Order No. 203 dated 03.18.2010, which
established the requirements for AML/CFT training and education of the
personnel in financial institutions. According to this Order the training
programs are supplemented by the following requirement:
- study of the typologies, specifi