The amendments will be introduced to Articles 46 (the list of fines and other sums subject to compulsory recovery) and 146 (the list of revenues of state extra-budgetary funds, including the PFR) of the Budget Code. It is assumed that the amendments are technical in nature and are needed to synchronize them with amendments to the Civil Code (CC) and Federal Law No. 273-FZ of 25.12.2008 “On Combating Corruption”.

The amendments to the CC, in turn, provide that in certain cases not only property for which no evidence is provided confirming that it was acquired (real estate, yachts, securities, etc.) with lawful income may be confiscated (this is already provided for), but also cash and bank deposits if there is no evidence of the lawfulness of their receipt (this is what is planned to be introduced).

According to the official information from the Ministry of Justice, cash will be confiscated from corrupt officials if the amount exceeds the person's total income for the past 3 years and if no reliable information is provided confirming the lawfulness of its receipt.

The new draft laws will apply to federal and regional government officials, municipal employees and other persons who are legally required to declare both their own property and the income of close relatives — spouses and minor children. Thus, the new confiscation rules should not apply to persons who are not government officials or their close relatives. Nevertheless, the Constitutional Court, in its Decision of 2 October 2019 (in the Dmitry Zakharchenko case), upheld the confiscation of property belonging to distant relatives and acquaintances of persons found guilty of corruption as lawful.

We were unable to find the draft law itself in the public domain; we will closely monitor further clarifications and await official information. Although the new rules are expected to apply to government officials and civil servants, we believe that this approach may set a certain legislative trend that could later lead to the extension of these rules to other categories of citizens.

Our specialists are ready to conduct an audit of your asset portfolio in order to confirm the legality of the sources of capital formation.

The scope of services includes:

• Assessing the asset portfolio to identify tax and currency risks, as well as the availability of supporting grounds regarding the sources of funds,
  
  

• Preparing / arranging / submitting the necessary documentation to reduce the identified risks,
  
  

• Developing an action strategy and preparing a set of documents confirming the lawful origin of capital.

In the future, this set of documents may be used as a “defensive file” if questions / demands arise from regulatory authorities in Russia and foreign countries, as well as when opening bank accounts and undergoing the KYC procedure.

We will be happy to answer any additional questions.

Sergey Gerasimov

Managing Partner

+7 (916) 733 3983

Maxim Klyuchnikov

Partner

+7 (916) 220 97 77