Support of your company activities under Federal Law N 115 when working with banks in Russia

We provide recommendations on operations, warn about possible risks, promptly advise online 24/7.

Use our free legal advice

What is Federal Law N 115

Federal Law N 115 is a law

“On countering the legalization (laundering) of proceeds from crime and the financing of terrorism”
The law was adopted on August 7, 2001 and is based on 40 FATF Recommendations.

Federal Law N 115 regulates relations between individuals and legal entities, as well as state bodies exercising control on the territory of the Russian Federation in order to prevent, detect and suppress actions related to AML / CFT / CPF. 

countering the legalization (laundering) of income / financing of terrorism 

financing the proliferation of weapons of mass destruction

the international Group for the development of financial measures to combat money Laundering (FATF: Financial Action Task Force on Money Laundering).

How does Federal Law N 115 relate to the work of the business with the bank?

It is for these reasons that Federal Law N 115 is an integral part of working with any bank on the territory of the Russian Federation.
That is why every bank has an internal financial monitoring service that monitors transactions and identifies companies that conduct illegal activities.

Criteria of suspicious transactions

If the company’s operations on the current account seem suspicious or doubtful, the bank has the right to refuse further outgoing operations or / and restrict the functionality of online access to your account. Thus, you will not be able to pay your partner’s invoice and your business may get affected.

That is why it is important to understand the criteria that the bank uses when qualifying operations.

Companies that are considered suspicious:
  • they do not pay taxes in full;
  • they work without officially employed staff;
  • they hire employees with wages below the market;
  • they use cash in their work;
  • they do not charge VAT;
  • they perform operations that are not related to the company’s codes for OKVED;
  • they issue payment orders incorrectly;
  • they do not have documents justifying the operations or have unreliable documents;
  • they participate in the financing of illicit imports – imports of goods into the territory of the Russian Federation without official declaration;
  • they do not respond to the bank’s requests.
  • There are signs of operations that indicate that certain operations or transactions that look ordinary on the surface may actually be carried out for the purpose of money laundering or terrorist financing.

    The tax burden coefficient is the ratio of the company’s revenue to the taxes paid. As part of the implementation of the methodological recommendations of the Central Bank and guided by Federal Law N 115, banks control the tax burden of companies. Thus, according to the Methodological Recommendations of the Central Bank of the Russian Federation No. 18-R, approved in 2017, if the amount of tax payment is less than 0.9% of the total turnover on the account, this indicates that the company is conducting questionable activities. The Bank may refuse to serve such a client.

    In addition, this indicator is used by the tax service when analyzing the details of companies for drawing up a plan of inspections. The lower the tax burden, the greater the probability of inspection. The Order of the Federal Tax Service of 30.05.2007 No. MM-3-06/333@ “On approval of the Concept of the system for planning on-site tax inspections” provides the criteria by which an organization falls into the risk zone when drawing up an audit plan. The first item on the list is that the tax burden on businesses is less than the industry average.

    Companies whose accounts do not process payments for salaries and related taxes, as well as social contributions, will certainly fall into the list of suspicious customers. Those who do not pay official salaries are also suspicious. If the company operates, generates revenue to the account, then it is assumed that the company must have resources in the form of personnel, who generate this revenue. Official salary criteria are:

  • it is paid through the company’s current account within the framework of an employment contract with an employee;
  • the level of wages is higher than the subsistence minimum;
  • after the salary transfer, the company pays personal income tax (usually 13%);
  • after the salary transfer, the company pays insurance premiums for employees (usually 30%).
  • Companies that conduct activities aimed at withdrawing capital, as a rule, do not have the opportunity to keep money in a current account. As soon as the payment arrives, there is immediately a need to transfer the full amount. However, for an ordinary business, as a rule, the time passes between an incoming and outgoing payment. Guided by these criteria, banks monitor the rate of account zeroing, as well as the criteria for the amounts of incoming and outgoing payments. The bank will suspect companies that do not have a balance on the account or it is significantly less than the turnover on the account.

    All operations of the company must be related to its activities. The bank should understand that incoming and outgoing payments are made within the framework of your normal business activities. If the bank does not understand from which works/services funds come to the company’s account, or on what the funds are spent, then in this case the company falls under suspicion.

    If your company’s account turnover is growing dramatically and inexplicably, this is good, but at the same time it is suspicious. An unofficial criterion is the growth of the business by two times in one month. In this case, the bank may ask questions. To prove to the bank that this is not suspicious, prepare contracts with customers, acts, technical tasks — any documents that explain the sudden increase in revenue. In addition, banks compare the real turnover of the company and the turnover declared by this company in the questionnaire when opening an account. Therefore, it is important to take this aspect seriously starting from the opening of a bank account.

    Companies that conduct illegal activities save money, so they often do not have an office or have one, but formally. They do not pay for rent, electricity, gas, paper for the office and paper for the printer. It happens that normal companies pay, but in cash, and the bank does not see such payments. In order for the bank to have no questions for you, the bank should see the history of your economic expenses and it should be proportional to the size of the business.

    Companies that have accounts in different banks often fall into the list of suspicious customers. If you have accounts in different banks, and one of the banks does not see your household expenses or wages, then you get into the list of suspicious customers. In addition, each bank will monitor the tax burden, and definitely, it will fall short in one of the banks.  

    • – Cash withdrawal from the company’s account;
      – Transfer to individuals without paying personal income tax and social contributions;
      – Payment of taxes not in full;
      – Making payments that do not correspond to the declared type of activity when opening an account;
      – Inaccurate or incomplete filling in of the payment purpose in the payment order;
      – Conducting transactions with doubtful counterparties or with counterparties whose reputation cannot be checked.
      – No payments for the company’s business activities.

    The cost of our services

    Subscription legal support of the company within the framework of Federal Law N 115

    from 150 € per month

    Preparation of an application to the Interdepartmental Commission of the Central Bank of the Russian Federation

    from 650 €

    Preparation of a statement of claim to the Arbitration Court

    from 650 €

    Participation in subsequent court proceedings

    from 450 €

    What is included in the service?

    Taking care of the security of your bank account from the first day after opening.

    How can you control your transactions?

    • Tax burden coefficient = taxes paid (without agency payments: income tax on dividends, personal income tax, insurance premiums) / income from the Statement of Financial Results (without income from participation in other organizations)
    • Each bank has its own limits for withdrawing cash from the company’s account. But, as a rule, for most, the threshold of 30% of cash withdrawals from the total turnover on the account is critical.
    • Each transaction must be carried out within the framework of the declared economic activity of the company, within the framework of official relations (contractual or not), and also have confirmation of the fulfillment of your company’s obligations.
      Banks can request absolutely any documents on the financial and economic activities of the organization in order to confirm the operations on the account, as well as to confirm the legality of the business. Often, banks request documents on the purchase and sale of the same goods to confirm their real value.
    • The problem with using cash is that the bank does not know what the client spends it on – for legal or illegal purposes. Therefore, replace all cash spending with spending using a corporate bank card. But, use the card only for reasonable and logical business goals of the company.
    • Companies with real business activities differ from others in the tax burden. If you keep accounting records within all regulatory requirements and pay taxes on time, then your tax burden coefficient will not be lower than the minimum threshold.
    • Banks pay attention to companies that do not pay taxes. Therefore, no matter how many accounts you have, you need to ensure the proper level of taxes and other payments in each bank.
    • Transferring money to individuals is one of the ways to illegally withdraw money, and therefore banks monitor such operations very closely.
      Money can be transferred to individuals only with the payment of personal income tax and social contributions. Dividends can be paid only to owners, only from officially confirmed profits and if there is a decision of the company to pay dividends. Payment to the self-employed — only upon conclusion of the contract and provided that the self-employed provides a receipt.
    • As a rule, business involves the accumulation of funds from all receipts to the account and gradual spending, and not the payment of a one-time amount from one receipt.
    • Banks are suspicious when they see “Payment for services”in a payment order. If the bank does not understand what exactly the client is paying for, then suspicion sets in. Therefore, describe in detail what exactly you are paying for. In all payments, write the number and date of the contract, the name of the service or product, whether there is VAT or not, and the amount of VAT. For example: “Payment for the supply of equipment for the production of cardboard of the _ _ _ _ _ brand (the name of the equipment brand or other characteristic)under contract no. _ _ dd. ____(date), Without VAT”.
    • Companies that do not have officially employed staff or have with salaries at the level of the minimum wage, fall under suspicion. The level of the average salary can be found on the leading job search sites. Feel free to register all employees officially. As a result, this should give its positive results.
    • Companies need to pay for office rent, electricity, gas, water, stationery, paper — everything that helps businesses to work and people to survive at work. And you do this and be sure to do it from the company’s account.
    • The Bank evaluates transfers and receipts within the framework of your OKVED codes. If you have a paper production according to the code, and the company receives payments for metal, then this is a problem. Delete the codes that you are no longer working on, and add the relevant ones.
    • Companies whose purpose is to conduct illegal business usually underpay VAT. For example, they sell services or goods with VAT, but they do not buy anything with VAT themselves, or they buy but little. Or they can leave the company altogether, and still not pay VAT. Pay VAT in full.

    What business documents are important to draw up and store for the bank

    • – An annex to the contract is a document that clarifies the content of the terms of the contract, and is an integral part of the contract;
      – An additional agreement is a document that makes changes to an existing and previously signed contract;
      Specifications for the product with its detailed characteristics: item, weight, quantity;
      – Technical specification for the performance of works, the provision of services;
      Schedule of performance of works, rendering of services;
      – Payment or delivery schedule;
      A list of real estate objects with a detailed description and indication of cadastral numbers; a protocol of disagreements and agreement on the terms of the contract;
      – Acts of acceptance and transfer (work, goods, etc.).
    • – certificates of completed works/services;
      – invoices;
      – consignment notes;
      – reconciliation reports;
      – photos of goods/objects;
      – correspondence with contractors.
    • – transport waybills;
      – applications;
      – contracts with cargo delivery companies;
    • – quality certificates;
      – declarations of conformity;
      – veterinary certificates;
      – other documents;

    – employment contracts with employees;
    – staffing table;
    – availability of the necessary admissions;
    – other agreements with employees.

    • – real estate;
      – cars;
      – equipment;
      – machinery;
      – licensed programs.

    What can the bank do if the operation of your organization qualifies as suspicious

    What should I do if you have received a request from the bank to provide documents?

    According to Federal Law N 115, banks have the right to send requests to customers for the provision of documents on transactions carried out. At the same time, the company is obliged to provide these documents.

    In addition, the bank may request documents for a specific payment.
    In this case, this payment may be suspended until the bank is satisfied that the transaction is not questionable.
    Based on the results of reviewing the documents, the bank may process the payment or refuse to process it.

    In all cases, when there are questions about individual operations or the company as a whole, the bank may limit the work on the remote service system.

    • – First, pay attention to the letters from the bank coming to your electronic banking account, so as not to miss the deadline for responding to the request and have time to collect all the documents. On average, banks give a period of 3 to 7 days to submit documents. And the list of documents is impressive. If some documents are not kept for objective reasons, be sure to include this information in the written explanations.

      – Secondly, to respond to the bank’s requests in full at the specified time and in full.

      – If the organization provides all the necessary documents on time, the bank will remove all questions and the client will be able to work on the account as he did before – without restrictions.

      – If the company has not submitted the documents and explanations within the prescribed period, then in this case the bank may:

      – refuse to perform the operation and inform Rosfinmonitoring about it;
      perform the operation, but assign it the status of suspicious or subject to mandatory control. And also report to Rosfinmonitoring;

      – review the client’s risk level;

      – terminate the bank account (deposit) agreement with the client if two or more decisions are made within a calendar year to refuse to perform the operation.

    The mechanism of rehabilitation or how to get out of the “Black list of the Central Bank of the Russian Federation”

    After receiving a notification from the Bank that it is impossible to eliminate the grounds for which the decision to refuse to process the operation was made earlier, the Client has the right to send an application to the Interdepartmental Commission to appeal this decision of the financial organization.

    • – the bank informs the client for what reasons it refused to conduct the operation or open a bank account;
      the client submits to the bank evidence of the unreasonableness of the bank’s decision;

      – the bank reviews the evidence within 10 working days and informs the client whether the reasons for the denial of service have been eliminated or not;

      – if the bank sends a message to the client about the impossibility of eliminating the grounds for which a decision to refuse to conduct an operation was previously made, the client has the right to apply to the Interdepartmental Commission of the Central Bank.

      When applying to the Commission, the period that has passed since the bank’s refusal does not matter, unlike, for example, applying to the court, which is subject to the statute of limitations.

    • – When an application is received for consideration, it is checked by the Bank of Russia for compliance with the requirements.

      – The application may be accepted, left without movement or rejected.

      If the application is accepted for consideration, the Interdepartmental Commission will request from the bank information about in respect of whom the application was received, a reasoned justification for the decision to refuse to conduct the operation.

      – The bank is obliged to submit a response to the Interdepartmental Commission within the period specified in the request.

      – The Commission considers the application and makes a decision.

      The decision made by the Interdepartamental Commission is not subject to review.

      If the Interdepartmental Commission of the Central Bank did not help, then there is an option to appeal to the Arbitration Court. Judicial practice shows that it is possible to prove the illegality of the bank’s actions.

    Oficina de moscú

    IP Konon Sergey Mikhailovich
    OGRNIP 311502426400047
    Dirección de la oficina: 127299, Russia, Moscow, Cosmonaut Volkova Street, 20, office 520

    Contacto

    Correo electrónico: konon@vitaliberta.ru
    Tel de oficina: +7(499) 110-80-55
    Skype: ygrtima

    Suscríbase ahora