Home / Doing business in Russia 2020 / Banking sector / The anti-money laundering law
  1. Introduction
    1. Political and administrative structure
    2. Legal environment
  2. Common forms of business structures for foreign investors
    1. Main types of structure
    2. Registration, liquidation and reorganisation of business structures
    3. Shareholders’ and participants’ agreements
    4. Strategic industries
  3. Anti-monopoly issues
    1. General legal and regulatory framework
    2. Scope of application of the Competition Law
    3. Anti-competitive practices and restriction of competition
    4. Liability
  4. Tax system
    1. General approach
    2. Corporate taxation
    3. Incentives
    4. Special tax regimes
    5. Taxation of individuals
    6. Double taxation treaties
  5. Customs regulations
    1. Trade between EEU and non-EEU countries
    2. Mutual trade between the EEU members
    3. General approach
  6. Currency control
    1. Foreign currency transactions
    2. Consequences of breach/Penalties
  7. Lending in Russia
    1. Lending documents and governing law
    2. Jurisdiction
    3. International finance transactions and repatriation requirements
    4. Security interests
    5. Recognition of security trusts
    6. Syndicated loans
    7. Enforcement
    8. Suretyships and guarantees
    9. Bankruptcy considerations
    10. Other lending related issues
  8. Employment and migration
    1. Formalising the employment relationship
    2. Managing employment relationships
    3. Terminating an employment agreement
    4. Specifics of employing foreign nationals
  9. Personal data protection
    1. General approach
    2. Scope of the Data Protection Law
    3. Liability
    4. Right to be forgotten
  10. Intellectual property
    1. General approach
    2. Contractual aspects of intellectual property rights
    3. Rights over the results of intellectual activity
    4. Company names, trade names, trademarks and appellations of origin
    5. Intellectual property rights infringements
    6. IP Court
  11. Advertising issues
    1. General approach
    2. Scope of application of the Advertising Law
    3. Violations of the Advertising Law
    4. Liability
  12. Anti-corruption and compliance
    1. General approach
    2. Legal framework
    3. Compliance requirements for companies
    4. Concept of corruption in Russian law
    5. Possible targets of bribery
    6. Liability and penalties for corruption
    7. Example of sector-specific anti-corruption measures
  13. Real estate and construction
    1. Rights to real estate
    2. Real estate transactions
    3. Resolution of real estate disputes
    4. Planning and construction issues
  14. Corporate bankruptcy
    1. Insolvency criteria
    2. Stages of bankruptcy proceedings
  15. Import substitution and production localisation in Russia
    1. Measures affecting goods importation and current import substitution legislation
    2. Localisation incentives
    3. Sector-specific impact of import restrictions and localisation requirements
  16. Banking sector
    1. Legislative and regulatory framework
    2. Licensing and operations
    3. Deposit insurance
    4. The anti-money laundering law
    5. Bank secrecy
    6. FATCA and CRS
  17. Environment, energy efficiency and renewables
    1. Environment
    2. Energy efficiency
    3. Renewables
  18. Infrastructure and public private partnerships
    1. General approach
    2. Key PPP legislation
    3. Russian PPP environment
    4. Financing
    5. Legal issues
    6. Prospects for infrastructure projects
  19. Oil & gas
    1. Legislative framework
    2. Ownership and licensing
    3. Restrictions on foreign investors
    4. Licences
    5. PSAs

Banking sector

The Russian banking industry is still characterised by a large number of credit institutions (836 as of 1 January 2020) and by a high level of concentration of capital.

In 2018-2019 the Central Bank of Russia (the “CBR”) continued its policy of reducing the number of credit institutions, aiming for their consolidation and the closer supervision of their activities in the current economic climate. Consequently, a noticeable number of banking licences were revoked in the last two years.

As of 1 January 2020, 60.3% of the banking sector’s total assets were held by the top five Russian banks1. State-owned banks2 continue to play a significant role in the stabilisation and development of the Russian banking sector.


[1] As of 1 January 2020, the top five Russian banks in terms of net assets are Sberbank (RUB 28.9bn, i.e. EUR 412.9m); VTB (RUB 14.3bn, i.e. EUR 204.3m); Gazprombank (RUB 6.5bn, i.e. EUR 92.9m); National Clearing Centre Bank (RUB 4bn, i.e. EUR 57.2m); and Alfa-Bank (RUB 3.8bn, i.e. EUR 54.3m); www.banki.ru/banks/ratings/ (all conversions are based on a notional rate of RUB 70 = EUR 1, as used for convenience throughout this guide).

[2] Such as Sberbank, VTB, Gazprombank, etc.

Key contacts

Contact
Baranov Konstantin
Konstantin Baranov
Partner
Head of Banking & Finance
Tchoubykina Elena
Elena Tchoubykina
Counsel
Banking & Finance

The anti-money laundering law

Federal Law No. 115-FZ “On Combating Money Laundering and the Financing of Terrorism” (the “AML Law”) came into force on 1 February 2002, and has been revised a number of times to reflect the global developments in this area. 

It is the primary legislative act in the Russian Federation aimed at preventing money laundering activities and the financing of terrorism, and is supported by numerous recommendations, binding instructions and regulations of the CBR and other authorities.

The AML Law applies to individuals and legal entities engaged in transactions with monies (and other assets) in Russia, as well as so-called “regulated entities” and the state authorities responsible for monitoring money laundering activities in Russia. It provides for mandatory internal procedures and reporting requirements in the event of any suspicious or otherwise monitored transactions.

Financial institutions, such as banks and non-banking credit institutions, professional participants of the securities market, insurance and leasing companies, postal and other non-credit institutions that deal with the transmission of money (the “Regulated Entities”), are required, with limited exceptions, to perform due diligence by ascertaining the identity of a customer (and beneficiary) and monitoring transactions for suspicious activity. To ensure compliance, most Regulated Entities are obliged to develop and implement sophisticated internal regulations and procedures. They must also maintain a sufficient level of education and training on these matters for relevant employees.

In addition, according to recent amendments to the AML Law, Regulated Entities which are members of a banking group or a banking holding1  are entitled to exchange client information to identify clients as required by the AML Law (provided that they comply with certain requirements). However, this new rule does not allow the transfer of client information to foreign parent banks or foreign members of a banking group.

The Regulated Entities must identify and report transactions of a suspicious nature to the Federal Financial Monitoring Service, a designated monitoring authority. These transactions, among others, include cash or non-cash transactions of at least RUB 600,000 (EUR 8,580) and immovable property transactions of at least RUB 3m (EUR 42,900), or the equivalent of these amounts in foreign currency. If one of the parties to a transaction is suspected of being related to terrorist activity, the transaction is subject to mandatory control regardless of the amounts involved.

The Russian anti-money laundering legislation is consistent with the relevant international practice and provides for advanced identification and control procedures in respect of foreign politically exposed persons (so-called “PEPs”).

The CBR may undertake preventative and/or enforcement measures in respect of a Regulated Entity involved in transactions that infringe the anti-money laundering legislation. These measures may include:

  • informing the entity of the CBR’s concern regarding its activities;
  • suggesting that the entity provides the CBR with a programme for improvement; and
  • establishing additional monitoring measures.

Enforcement measures may also include the imposition of a penalty and the withdrawal of the banking licence. The Russian Criminal Code provides for criminal liability for breaches of the legislation on anti-money laundering and this includes penalties and imprisonment for the bank’s management.


[1] The terms “banking groups” and “banking holdings” are defined in accordance with the Banking Law. Back ↑


Key contacts

Baranov Konstantin
Konstantin Baranov
Partner
Head of Banking & Finance
Tchoubykina Elena
Elena Tchoubykina
Counsel
Banking & Finance