Financial Crime World

Russian Federation’s Finance Sector: The Crucial Role of Compliance Amidst Complex Legal Landscape

The Importance of Compliance Management in Russia’s Economic Environment

The intricate and ever-changing economic landscape of the Russian Federation necessitates robust compliance models for businesses operating within its jurisdiction. Compliance management has emerged as a critical facet in managing risks associated with various laws and regulations. Although the Russian legal framework for risk and compliance management is evolving, it remains more focused on the financial and public sectors.

: why is compliance essential in Russia?

Compliance management is not solely based on statutory requirements but also helps manage risks in areas such as:

  • Anticorruption
  • Antitrust
  • Money laundering and terrorism financing
  • Personal data protection

: key legislations addressing compliance management

A limited number of legislative acts directly address corporate risk and compliance management:

  • Federal Law No. 273-FZ on Combating Corruption
  • Federal Law No. 115-FZ on Combating Money Laundering and the Financing of Terrorism
  • Federal Law No. 39-FZ on the Securities Market
  • Federal Law No. 414-FZ on Central Depositary

Types of Undertakings and Regulatory Scope

: regulatory landscape and scope

The regulatory landscape for risk and compliance management is still evolving:

  1. Joint stock companies receive more guidance.
  2. Limited liability companies have less clarity.
  3. The financial industry remains the most heavily regulated sector.

Regulatory and Enforcing Bodies

: key regulatory and enforcement bodies

Several regulatory and enforcement bodies oversee corporate compliance in the Russian Federation:

  1. Central Bank of Russia
  2. Public Prosecutors Office of the Russian Federation
  3. Federal Antimonopoly Service
  4. Federal Financial Monitoring Service (Rosfinmonitoring)
  5. Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications (Roskomnadzor)

: primary powers

Their primary powers range from administrative to criminal.

Definitions and Compliance Regulations

: legally defined terms for risk and compliance management

Legally defined terms for “risk management” and “compliance management” are still lacking in Russia, though various statutory provisions have an influence.

Anti-corruption Compliance

: implementing measures against corruption

Article 13.3 of Federal Law No. 273-FZ On Combatting Corruption requires all companies in Russia to develop measures aimed at preventing corruption. However, it does not provide clear guidance on implementation.

Anti-Money Laundering Compliance

: identifying beneficial owners

Since 2001, Federal Law No. 115-FZ On Combating Money Laundering and the Financing of Terrorism has required credit organizations to implement measures to identify the beneficial owners of their clients but does not provide specific guidelines on how to do so.

Antitrust Compliance

: regulatory framework and preventive measures

Russia’s antitrust compliance regulatory framework began taking shape around 2011 with a focus on preventive measures due to its potential impact on liability arising from antitrust violations.

Data Protection Compliance

: protecting personal data

Federal Law No. 152-FZ On Personal Data, enacted in 2006, regulates all personal data processing in Russia and requires data operators to take measures to secure data proper handling and protection. Since September 2015, all personal data on Russian citizens must be stored on servers in Russia.