Who is the bank beneficiary? Who is a beneficiary: definition, features and rights. Information about beneficiaries. Who is the ultimate beneficiary

Antipyretics for children are prescribed by a pediatrician. But there are emergency situations with fever when the child needs to be given medicine immediately. Then the parents take responsibility and use antipyretic drugs. What is allowed to be given to infants? How can you lower the temperature in older children? What medications are the safest?

Beneficiary- this is the recipient of cash payments (income) according to the drawn up agreement or debt document. Such a recipient can be not only an individual, but also a legal entity that is the owner of all or the majority of the company’s shares and receives all income from the company’s activities.

Sometimes the concept of beneficiary can be transported to beneficiary. However, its value will not change at all.

Description of the beneficiary in simple words

A beneficiary is a person who owns documents for property (company, business, real estate) and receives the main profit from this.

Beneficiary - information from Wikipedia

Other meanings of the term "beneficiary"

However, the concept of beneficiary can be considered from other non-identical points of view.

This may be the name given to persons who receive income from their property, which is in the use of third parties or in trust management. We are talking about the lease of movable and immovable property or the fact of transferring securities for use by brokers.
There is another interpretation of the concept of beneficiary. In this case, they will be presented with a claimant who has been nominated by the policyholder. In this case, the beneficiary is indicated in the insurance policy. If the beneficiary, due to certain circumstances, cannot receive the agreed debt, all rights to ownership of the funds being paid will be transferred to the person who is the heir of the beneficiary.
This term also refers to the immediate recipients of a bank certificate, funds in collection, or recipients of financial benefits from a trust. The beneficiary can also be called persons who were indicated by the issuing bank as potential owners of a documentary letter of credit.
If we talk about the business sector, here the actual owner of the company who receives profit can act as a beneficiary. This is an individual who is able to enjoy all the rights of an owner and position himself as the owner of the company. This process can be carried out directly or through participation in other organizations. Moreover, from a legal point of view, the ownership right belongs entirely to another person. Most often, the same person also acts as the manager of the company’s bank account. The beneficiary can only be disclosed to the financial institution and the company's agent of record.

The beneficiary, who is positioned as the owner of the securities, has full rights to transfer ownership rights. In addition, he has an indirect right to vote at a meeting of the joint-stock company, as well as the right to take direct part in the process of selecting new management and resolve issues related to the procedure for changing the authorized capital or changing the profile of the joint-stock company.

To hide the identity of the final beneficiary, a nominee service is often used, which is permitted in many offshore companies. The choice of the level of protection of a suitable company and accompanying document requirements can be made depending on the personal wishes of the client.

Providing information about the beneficiary is a mandatory procedure. An exception may be companies that are publicly listed. The same list includes charitable and public organizations, government-type institutions that cannot have owners or if they are known.

Only an individual can act as a beneficiary. A trust agreement can be drawn up for a legal entity, but you must first provide all information about the individual who is the actual owner of this organization.

Managing partner, lawyer

24.01.2018

The word “beneficiary” has firmly entered the vocabulary of everyone who is in one way or another connected with business, as well as with banking, tax, corporate and trust law. The concept of “beneficial owner” affects many aspects of the activities of legal entities, and for the beneficiaries themselves it predetermines a number of legal consequences.

Usually under beneficiary(beneficial owner, beneficial owner) is understood as the real owner of the company, that is, the one to whom the company belongs not legally, but actually and ultimately, and the one who has a significant influence on the decision-making of such a company. A beneficiary in this sense can be only an individual, special person.

However, the concept of “beneficiary” may have different content depending on the area in which it is applied:

First of all, the concept of “beneficial owner” is used in anti-money laundering legislation and financing of terrorism (hereinafter referred to as AML/CFT) and banking legislation, as well as in documents of international organizations in this area (FATF, OECD, EU).
Further, the word “beneficiary” is used in corporate and trust law countries of the Anglo-Saxon legal family. The beneficiary of a company can be either its title shareholder or the person in whose favor the nominee shareholder holds the shares. The beneficiary of a trust is the person for whose benefit the trustee owns and manages the property transferred to the trust.
We also talk about the “beneficial owner” as the person who has the actual right to the income (the actual recipient of the income), for the purposes of applying international double taxation agreements.
Finally, the concept of “beneficiary” partially overlaps with the concept "controlling person", which is used for tax purposes of controlled foreign companies in Russia.

Beneficial owner for AML/CFT purposes in Russia

In Russia, the concept of “beneficial owner” is used mainly in the context of anti-money laundering legislation. Federal Law No. 115-FZ of August 7, 2001 “On combating the legalization (laundering) of proceeds from crime and the financing of terrorism” (hereinafter referred to as Law No. 115-FZ) gives the following definition:

Beneficial owner is an individual who ultimately directly or indirectly (through third parties) owns(has a predominant participation more than 25% in capital) by a client - a legal entity or has the ability to control client actions.

Example. The only participant in a Russian LLC is a company registered in Cyprus. The 100% shareholder of the said Cypriot company is a company registered in the British Virgin Islands, the 100% shareholder of which is citizen N. In the case under consideration, citizen N is the beneficial owner of the Russian LLC.

In what cases is information about beneficiaries required?

1. Firstly, Article 6.1 of Law No. 115-FZ obliges legal entities to have information about their beneficial owners and take measures to establish information about them, as well as regularly update, document and store such information for at least 5 years. This requirement came into force on December 21, 2016.

Information that a legal entity must establish regarding the beneficiary includes:

last name, first name, patronymic (if available);
citizenship;
date of birth;
details of the identity document;
details of a migration card, a document confirming the right of a foreign citizen or stateless person to stay (reside) in the Russian Federation;
address of place of residence (registration) or place of stay;
Taxpayer identification number (if available).

Entity obliged provide available documented information about their beneficial owners or about measures taken to establish information about them at the request of the authorized body (Rosfinmonitoring) or tax authorities.

Failure of a legal entity to fulfill these obligations entails liability (Article 14.25.1 of the Code of Administrative Offenses of the Russian Federation) in the form of an administrative fine for officials from 30,000 to 40,000 rubles, for legal entities - from 100,000 to 500,000 rubles.

2. Secondly, organizations carrying out transactions with funds or other property (namely - banks, brokers, insurance companies, investment fund management companies, realtors, pawnshops and a number of others), obliged take reasonable and accessible measures to identify the beneficial owners of their clients.

If, as a result of taking these measures, the beneficial owner has not been identified, the sole executive body (for example, the general director) of the client may be recognized as such.

In addition, banks (and other organizations working with funds) are required to update information about the beneficial owners of their clients at least once a year, and in case of doubts about the reliability and accuracy of previously received information - within 7 business days following the day such doubts arise.

Finally, the banks are required to submit to the authorized body (Rosfinmonitoring) upon his request, information available to the organization about the beneficial owners of clients in the manner prescribed by the Regulation of the Central Bank of the Russian Federation dated September 20, 2017 No. 600-P.

Beneficial owner for AML/CFT purposes in the European Union

In the Member States of the European Union, the “beneficial owner” is defined on the basis of Directive 2015/849 of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing (the so-called 4th Directive).

According to paragraph 6 of Article 3 of this Directive, "beneficial owner"- is any individual(s) who ultimately owns or controls the client and/or the individual(s) in whose interests the transaction is made or the activity is carried out.

When corporate legal entities A beneficial owner is an individual who ultimately owns or controls a legal entity through direct or indirect ownership through a sufficient share of the shares, voting rights or participation interests in such legal entity, including through bearer shares, or through control by other means.

“Direct ownership” means ownership by an individual of shares in the amount of 25% plus one share or an ownership interest in the company of more than 25%. “Indirect ownership” occurs when 25 percent of the shares plus one share, or an interest of more than 25%, in the client legal entity is owned by another legal entity (or several legal entities) that are under the control of the individual. EU Member States are free to set a lower percentage to determine ownership or control.

When trusts The beneficial owner may be recognized as:

founder of the trust;
trustee;
protector (if equipped);
the actual beneficiaries of the trust, or, if such persons have not yet been identified, then the class of persons in whose interests the trust is established;
any other individuals exercising ultimate control over the trust.

Please note that for the purposes of AML/CFT in the EU, beneficiaries of a trust can be recognized not only as the direct beneficiary (“beneficiary” in the terminology of the terms of the trust), but also other participants in the trust relationship – the trust founder, trustee, etc.

When funds(being legal entities) or legal relationships similar to trusts, beneficial owners are recognized as individuals occupying equivalent or similar positions with the above persons for trusts.

In EU countries, identification of the beneficial owner of a client of banks and other financial institutions is a mandatory precondition for establishing a relationship with him or concluding a transaction.

EU corporate and other legal entities are required to obtain and maintain complete, accurate and current information about their beneficial owners, including the characteristics of their beneficial interest. Competent authorities (eg financial intelligence agencies) have the right to access such information.

Further, EU countries will have to create centralized registers of information about the beneficial owners of companies registered in these countries and determine the conditions, procedure and scope of public access to such data.

Beneficiary in corporate and trust law

IN companies the beneficiary may be:

title shareholder (the person whose details are indicated on the share certificate), or
another person on whose behalf and in whose interests the shares are owned by a nominal shareholder (in countries whose law allows for nominal ownership of shares/interests in companies).

In practice, the relationship between the nominee and the beneficial owner is recorded in a trust declaration or agreement (not to be confused with a “trust” - see below), under which the nominee undertakes to refrain from any actions (e.g. alienation, disposal) with the shares entrusted to him , unconditionally assigns to the beneficial owner all rights to receive dividends and other distributions of the company's profits, and also undertakes to exercise voting rights in relation to the shares owned by him only in accordance with the instructions of the beneficial owner.

Thus, the beneficiary of the company is not only the one who ultimately owns shares/shares in it, but also the one who gives instructions, mandatory for execution by the nominee, and determines economic destiny company income.

When opening a company bank account in any bank, the indication (and identification) of the beneficiary, and not just the nominal owner of the company, will be required. Whereas the role of a nominal owner is limited to holding shares and formally being in the company's shareholder register. Legal responsibility for any actions of the company (including situations leading to litigation) lies with its beneficiary.

IN trust(we are talking about a full-fledged trust as a fiduciary legal relationship, and not about a trust declaration within a company, as described above) the beneficiary is the person in whose favor and in whose interests the trustee performs his duties in managing the property transferred to the trust. The beneficiary has the terms of the trust interest in the property and/or income of the trust, but does not have the right to manage the trust property and control the actions of the trustee.

The design of a trust is typical for countries of the Anglo-Saxon legal family (including a number of offshore jurisdictions) and is not provided for in most countries of continental Europe, including Russia.

Beneficiary for the purposes of applying the tax treaty

In international tax law (namely, for the purposes of applying double taxation agreements (DTTs)), the word “beneficiary” has a different meaning. It means the person who has the actual right to the income. Moreover, such persons can be individuals, legal entities, and other structures.

The fact is that the preferential provisions of the DTT (reduced rates or tax exemptions) can be lawfully applied, provided that the recipient of the income (a resident of a state party to the DTT) is person having actual right to such income. This formulation is used in most Russian DTT texts. In equally authentic English-language texts of the same taxation agreements, it sounds like “beneficial owner” (“beneficial owner”).

According to paragraph 2 of Article 7 of the Tax Code of the Russian Federation person having actual right to income, a person (or a foreign structure without forming a legal entity) is recognized who, due to direct and (or) indirect participation in the organization, control over the organization (structure) or due to other circumstances, has the right to independently use and (or) dispose of income received by this organization (structure).

Foreign person not recognized having the actual right to income, if it:

Has limited powers regarding the disposal of these incomes,
- carries out intermediary functions in relation to the specified income in the interests of another person, without performing any other functions and without taking on any risks,
- directly or indirectly paying such income (in whole or in part) to this other person who, if directly receiving such income from sources in the Russian Federation, would not have the right to apply the relevant provisions of the DTT.

This approach is intended to prevent abuse of the preferential provisions of the DTT in cases where, when paying income from Russia to a person resident in a DTT party country, the beneficial owner of the income turns out to be a third party from another, for example, offshore, jurisdiction with zero taxation. In practice, situations are also possible when the actual (final) recipient of income paid abroad is a tax resident of the Russian Federation (for such cases, the Tax Code of the Russian Federation provides special rules - Articles 7, 312 of the Tax Code of the Russian Federation).

A foreign organization receiving income from Russia without withholding tax in Russia (or using reduced rates) in accordance with the DTT must provide the tax agent in Russia with documentary evidence of its actual right to the income (clause 1 of Article 312 of the Tax Code of the Russian Federation). This requirement is effective from January 1, 2017.

“Beneficial owner” and “controlling person” of the CFC

The definitions established by Russian legislation of a “beneficial owner” for AML/CFT purposes and a “controlling person” for tax purposes of controlled foreign companies (CFCs) do not coincide, but are often used as synonyms when it comes to the tax obligations of Russian beneficiaries of offshore companies. The differences are as follows:

Firstly, such a characteristic as “controlling person” is used in the Russian Federation only in relation to foreign companies and structures for tax purposes according to CFC rules. Whereas the concept of “beneficial owner” for AML/CFT purposes is applicable to any - both Russian and foreign companies.

Secondly, the basis for recognizing a foreign company as “controlled” is tied to the country of tax residence of the controlling person (that is, if such a person is a tax resident of the Russian Federation, then this foreign company is “controlled”). For AML/CFT purposes, the tax residence factor is not relevant.

Thirdly, according to the Tax Code of the Russian Federation, a “controlling person” can be not only an individual, but also a legal entity. This, however, does not exempt individuals - tax residents of the Russian Federation, who indirectly (i.e. through Russian legal entities) control foreign companies, from declaring their participation and control over them to the tax authorities of the Russian Federation.

Fourthly, if more than half of the participants in a foreign company are tax residents of the Russian Federation, the percentage “bar” of a person’s participation in the company’s capital, the excess of which entails recognition of the person as “controlling”, becomes lower - and is no longer 25%, but only 10 % (subclause 2 of clause 3 of Article 25.13 of the Tax Code of the Russian Federation).

In practice (adjusted for the above features), the “controlling person” and the “beneficial owner” of a foreign company are often the same person. Therefore, in media publications dedicated to the deoffshorization and taxation of CFCs, they talk about “beneficiaries”, meaning specifically “controlling persons”.

At the end of June 2013, Federal Law No. 134-FZ dated June 28, 2013 “On Amendments to Certain Legislative Acts of the Russian Federation in Combating Illegal Financial Transactions” (hereinafter referred to as Law No. 134-FZ) came into force. This law affected more than twenty existing regulations, including amendments to the Federal Law of August 7, 2001 No. 115-FZ “On Combating the Legalization (Laundering) of Proceeds from Crime and the Financing of Terrorism” (hereinafter referred to as Law No. 115FZ). The most discussed new norm is the emergence of an obligation for companies to provide information about beneficial owners upon the bank's request. The inclusion of this provision in national legislation is associated with recommendations prepared by the Financial Action Task Force (FATF) and strongly recommended for UN member states, including Russia. This is stated in UN Security Council Resolution No. 1617 (2005).

Banks have already begun to apply the new provisions, although with caution, since there are still no clarifications from the Bank of Russia and Rosfinmonitoring. For example, banks are already sending letters to clients demanding that beneficial owners be disclosed. There have also been cases of refusals to open a bank account due to failure to provide this information.

Beneficiary disclosure

Before amendments to Law No. 115-FZ, banks requested information only about the clients themselves and their beneficiaries. According to the new rules, they are also obliged to take reasonable and accessible measures in the current circumstances to identify the beneficial owners of their clients (paragraph 14, article 3, subparagraph 2, paragraph 1, article 7 of Law No. 115-FZ). Rosfinmonitoring can at any time request from the bank information about the beneficiaries of a particular client, and the bank is obliged to provide this information (subclause 5, clause 1, article 7 of Law No. 115-FZ). Otherwise, he faces a significant fine - from 300 to 500 thousand rubles (Part 2.3 of Article 15.27 of the Code of Administrative Offenses of the Russian Federation).

Law No. 115-FZ names not only banks, but also other organizations that carry out transactions with funds or other property as persons who have the right to demand disclosure of beneficial owners. These include any credit organizations, insurance companies (except for those that work exclusively in the field of health insurance), pawnshops, leasing companies and professional participants in the securities market, etc. (Article 5 of Law No. 115FZ).

In this regard, bank clients are obliged to provide, at the bank’s request, information about their beneficiaries (clause 14 of article 7 of law No. 115-FZ). But the problem is that neither Law No. 115-FZ nor any other legal act contains a list of measures that can be considered reasonable and accessible. Therefore, there are certain difficulties in understanding what measures banks need to take to identify the client’s beneficiary in order to avoid penalties, and what information needs to be submitted to Rosfinmonitoring if it requests this information. Now Law No. 115-FZ, as amended, provides that the volume, nature and procedure for banks to provide information on beneficial owners is established by the Bank of Russia. But at the moment such an order has not yet been established. Nevertheless, the Regulation on the identification of clients and beneficiaries by credit institutions for the purpose of combating the legalization (laundering) of proceeds from crime and the financing of terrorism, approved by the Bank of Russia on August 19, 2004 No. 262-P, is now in force. Of course, it refers to providing information only about the client and the beneficiary. But in the absence of any other clarification, this provision can be taken as a guideline in order to at least roughly understand what documents the bank may require.

“The new concept should include only the ultimate owners of the business”

What was the purpose of introducing the concept of “beneficial owner” in Law No. 115FZ?
— Changes in terms of control on the part of the credit institution of the final recipients of funds are the result of a targeted long-term government policy to disclose information about major shareholders and beneficial owners of Russian large and medium-sized companies. Thus, the history of this issue began with the general concept of reforming and clarifying the concept of “affiliated entity,” which was set out in the Financial Market Development Strategy for 2006–2008, approved by Decree of the Government of the Russian Federation dated June 1, 2006 No. 793-r.

Do the banks themselves now have a clear idea of who should be understood as the beneficial owner of the company?
— To date, banking practice regarding an unambiguous interpretation of the concept of “beneficial owner” has not been formed. But it is quite obvious that the new legal term in its interpretation is significantly narrower than the original concept of “beneficiary”. Considering the practical side of the definition of the beneficial owner, enshrined in paragraph 13 of Article 3 of Law No. 115-FZ, within the framework of general standards of corporate governance in Russia, we can say that the new concept should include only the ultimate owners of the business who have a share in the authorized capital of the parent holding companies more than 25 percent, as well as owners of management organizations of clients - legal entities (paragraph 3, clause 1, article 69 of the Federal Law of December 26, 1995 No. 208-FZ “On Joint-Stock Companies”, Article 42 of the Federal Law of February 8, 1998 No. 14 - Federal Law “On Limited Liability Companies”).

Do members of the board of directors automatically become beneficial owners just because they have some ability to control the actions of the company precisely because of their direct function?
— Automatically no, they don’t hit. Members of the board of directors can only be recognized as beneficial owners in certain cases. Until now, investment banking practice, when conducting Due Diligence of a client, followed exactly this path and requested, along with lists of affiliated persons, lists of participants (for limited liability companies), lists of registered persons in the register of shareholders (for joint stock companies) of clients, also protocols annual general meetings, as well as extraordinary meetings at which the current composition of the board of directors was elected (since previously it was necessary to identify the beneficiary, that is, the person for whose benefit the client of the credit institution acts). This was done to establish the affiliation of a member of the board of directors and the ultimate owners of the companies, since the concept of “beneficiary” can be interpreted much more broadly than “beneficial owner”. But you need to keep in mind that members of the board of directors are elected and accountable to the general meeting of participants (shareholders) and do not act on behalf of the company, but only participate in the internal management of the company, while monitoring the activities of the executive body (general director and (or) members of the board) . In other words, when determining beneficial owners, it is necessary to clearly understand that the degree of control of members of the board of directors over the activities of a company that is a client of a credit institution is always mediated by the will of the shareholders (participants) of the company.

Beneficial owner. To implement the requirements of Law No. 115-FZ, it now establishes the concept of beneficial owner.

WE QUOTE THE DOCUMENT

Beneficial owner is an individual who ultimately directly or indirectly (through third parties) owns (has a predominant participation of more than 25 percent in the capital) a client - a legal entity or has the ability to control the actions of the client (paragraph 13 of article 3 of law No. 115- Federal Law).

From this definition it follows that the beneficiary is considered not only certain participants (shareholders), but also persons not formally associated with the company who somehow control the actions of the client. In this case, not any participant (shareholder), but only that participant (shareholder) who owns a share (shares) exceeding 25 percent of the authorized capital can be recognized as the beneficial owner. For example, if in a limited liability company one participant owns 60 percent, and the remaining two have 20 percent each, then it is quite obvious that in this case the beneficiary will be the participant with a share of 60 percent.

Moreover, there are already banks that automatically recognize the general director as a beneficiary if nothing is indicated in the questionnaire in the “information about beneficial owners” column. Although there are those who consider each situation separately.

Also, the sole executive body of a legal entity can be recognized as the beneficial owner. This right is granted to the bank in the event that, as a result of all the measures taken, the beneficial owner cannot be identified (paragraph 5, subparagraph 2, paragraph 1, article 7 of Law No. 115-FZ). For example, if the company does not respond to the bank’s request to provide its beneficiaries. Or if the company has provided all the information, but it is impossible to identify the beneficiary. We are talking about a situation where, for example, a limited liability company has five participants, each of whom owns a share of 20 percent. In this case, none of them can be considered a beneficiary (since to be recognized as a beneficiary, the share must exceed 25 percent). Therefore, the bank can conclude that since it was not possible to identify the beneficiary after taking all possible measures, it is the sole executive body.

If the company does not fill out the column about beneficiaries in the questionnaire, then the bank can stop there (after all, it has taken all available measures to identify the beneficiary) and recognize the sole executive body as the beneficiary. But another option is also possible - the bank will notice that the chain of participation includes foreign companies, or will see other suspicious signs. Then he will use any methods to force the client to reveal the beneficiaries or change the bank.

Other controversial issues arise. For example, it is not clear who is considered the beneficial owner if one individual has a dominant participation in the capital of a legal entity, and another individual has the ability to control its actions. It seems more logical that the ability to control the actions of a legal entity is more significant for the purposes of combating the legalization (laundering) of proceeds from crime and the financing of terrorism, so the beneficiary can be considered the individual who controls the actions of the company. It is also not entirely clear whether a company can have more than one beneficial owner. In Law No. 115-FZ, the definition of a beneficial owner is formulated in such a way that one can draw the following conclusion: there should be only one. But then difficulties arise with determining the beneficiary in a situation where there are two individuals in the company and each of them has a share of participation (indirectly) in the capital of 50 percent.

Risks when disclosing beneficiaries. Some companies do not have any risk in providing information about beneficial owners. In particular, if they are participants (shareholders). In this case, there is nothing to hide, since such information is already known to the bank. It’s another matter if the company uses various tax planning schemes with the participation of companies located in offshore zones. There is a risk that at some stage tax legislation may limit the use of bilateral double tax treaties. And this trend can now be seen in many countries, including Russia. In this case, the tax authorities will be given access, for example, to information accumulated by banks regarding the beneficial owners of clients. Then companies using so-called tax planning (and perhaps not only them) may overnight lose all the benefits of the scheme they have implemented, which involves the use of a large number of foreign companies.

True, it must be taken into account that the bank is obliged to maintain bank secrecy and does not have the right to transfer information about the client, and therefore about its beneficiaries, to third parties (clause 1 of Article 857 of the Civil Code of the Russian Federation). Information containing bank secrecy is subject to disclosure only in cases prescribed by law.

Also, disclosing beneficial ownership information could potentially make companies worse off in some legal cases. In particular, in the context of bankruptcy of controlled companies. The fact is that the term “person controlling the debtor”, used in the Federal Law of October 26, 2002 No. 127-FZ “On Insolvency (Bankruptcy)” (hereinafter referred to as Law No. 127-FZ), is generally similar to the concept of “beneficial owner” , used in law No. 115-FZ. The only difference is that Law No. 127-FZ establishes a higher ownership threshold (50 percent) as a determining factor for the presence of control. If the court hearing the bankruptcy case is provided with a bank questionnaire in which the client (the debtor in this case) indicated its beneficial owners, as well as relevant supporting documents, this can serve as significant evidence of the existence of control of such persons over the debtor. And then there will be a risk that the debtor will be declared bankrupt as a result of the actions or inaction of the persons controlling the debtor (essentially, his beneficiaries), which threatens them with being brought to subsidiary liability for his obligations in the event of insufficiency of the debtor’s property (clause 4 of article 10 of law no. 127-FZ).

Beneficial Owner Identification Procedure

Law No. 115-FZ states that banks are required to take measures, including to establish information about beneficiaries, which are specified in subparagraph 1 of paragraph 1 of Article 7 of Law No. 115-FZ (on requesting information about the client and its beneficiaries). Thus, the bank has the right to request the following information about the beneficiary (individual): last name, first name, patronymic (unless otherwise provided by law or national custom), citizenship, date of birth, details of the identity document, migration card details, document details, confirming the right of a foreign citizen or stateless person to stay (reside) in the Russian Federation, address of place of residence (registration) or place of stay, TIN (if available).

This is not the first time that some companies are faced with the requirement to provide information about the chain of ownership. More details in the article “Features of contracts with state-owned companies. How to respond to the requirement to disclose beneficiaries” (No. 12, 2012).

Identification of clients' beneficiaries. Banks identify beneficial owners twice: before opening a bank account, and also during the next update of client information. During initial identification, that is, when a company contacts a bank to conclude a bank account agreement, the bank provides a questionnaire in which you need to fill out a column about the company’s beneficiaries. Based on this information, the bank will make a decision on opening an account.

If we are talking about an existing client of the bank, the bank is obliged to establish the beneficial owner of such a client at the next update of information about him. Such information updating is carried out at least once a year (subparagraph 3, paragraph 1, article 7 of Law No. 115-FZ). Thus, no later than one year from the date of entry into force of Law No. 134-FZ (that is, no later than 06/30/14), banks must complete the identification of the beneficial owners of their current clients. If the bank has doubts about the reliability and accuracy of previously received information, then it is obliged to send a request demanding that this information be provided within seven working days following the day such doubts arise (subclause 3, clause 1, article 7 of Law No. 115- Federal Law). For example, if he finds any of the transactions involving funds suspicious.

Cases when the bank does not identify beneficiaries. Law No. 115-FZ lists several cases when banks may not identify the beneficiaries of their clients. Firstly, if a client - an individual contacts the bank to make a payment or transfer (including electronic funds) in an amount not exceeding 15 thousand rubles, and also if he purchases or sells foreign cash for the same amount . Although this rule will not apply if a bank employee has suspicions that this operation is being carried out for the purpose of legalizing (laundering) proceeds from crime or financing terrorism (subclauses 1.1–1.4, clause 1, article 7 of Law No. 115-FZ ).

From the wording of paragraph 13 of Article 3 of Law No. 115-FZ, it follows that banks are required to identify the beneficiaries of not only companies, but also individuals - bank clients. After all, it talks about a person who controls any client (regardless of whether it is a company or an individual). Most likely, this was done intentionally: to prevent money laundering through fake individual entrepreneurs.

In addition, identification of beneficial owners is not carried out in the case of accepting clients who are state authorities or local governments, institutions under their jurisdiction, state extra-budgetary funds, state corporations or organizations in which the Russian Federation, constituent entities of the Russian Federation or municipalities have more than 50 percent of shares (shares) in the capital. Also, international organizations, foreign states and their administrative-territorial units that have independent legal capacity are not included in the identification. And also issuers of securities admitted to organized trading, who disclose information in accordance with securities legislation (subclause 2, clause 1, article 7 of Law No. 115-FZ). True, the same subclause provides for an exception - when Rosfinmonitoring sends a request to provide information about beneficiaries.

Risks of failure to provide information about beneficial owners

Law No. 115-FZ only provides for the client’s obligation to provide the bank with information about the beneficial owner. Neither administrative nor criminal liability has been provided for a client who has failed to fulfill such an obligation (there are no corresponding bills yet either). Despite this, companies face other risks of failing to disclose their beneficial owners.

Refusal to conclude a bank account agreement. If a company has just applied to the bank to start banking services, but has not indicated its beneficiaries in the application form, it may face the bank’s refusal to accept it for service. Thus, according to paragraph 5.2 of Article 7 of Law No. 115-FZ, the bank has such a right if there are suspicions that the purpose of concluding such an agreement is to carry out transactions for the purpose of legalizing (laundering) proceeds from crime or financing terrorism, and at the same time if such a possibility is provided for in the bank’s internal control rules. Naturally, we are talking about a case when the bank really has doubts regarding the activities of a potential client. The fact that, due to objective economic reasons, the bank is interested in opening an account for the client, allows us to conclude that banks are likely to resort to such refusals only if they really believe that servicing such a client creates a risk of sanctions being applied to the bank by regulatory authorities .

Refusal to make a payment. According to paragraph 11 of Article 7 of Law No. 115-FZ, the bank has the right to refuse to execute a client’s order to complete a monetary transaction in two cases. Firstly, if the documents necessary to record information in accordance with the provisions of Law No. 115-FZ are not submitted. Secondly, if, as a result of the implementation of internal control rules, a bank employee suspects that the operation is being carried out for the purpose of legalizing (laundering) proceeds from crime or financing terrorism. True, the bank will not be able to refuse to credit funds received to the account of an individual or legal entity. Thus, if the company does not provide information about the beneficiaries, there is a possibility that the bank will be able to use any of these grounds and refuse to carry out the client’s monetary transactions. Moreover, if during the calendar year the bank twice refused to carry out transactions with the client due to the client’s failure to provide documents required by the bank, then the bank has the right to terminate the bank account agreement with him (clause 5.2 of Article 7 of Law No. 115-FZ). But it seems that these will be extreme measures, given that it is not profitable for the bank to lose customers.

“Information about participants (shareholders) is not enough to determine the ultimate beneficiary”

The definition of beneficial owner, enshrined in Law No. 115-FZ, has long been known both to international financial practice and to Russian financial organizations, primarily banks. Some of them (primarily subsidiaries of foreign organizations) already require information about beneficial owners as part of the KYC (“Know Your Customer”) procedure. The Bank of Russia has also been requesting information about the beneficial owners of Russian banks for several years. Therefore, Russian banks definitely have a certain understanding on this issue. It is difficult to call it clear due to the vagueness of the wording “indirect possession” and, as a consequence, the inevitable ambiguity of its interpretation. But it is absolutely clear that information about the participants (shareholders) of the company, especially if they are legal entities, is not enough to determine the ultimate beneficiary. Members of the board of directors are also not automatically considered beneficial owners, since their ability to control the client’s actions is limited both by law and by the provisions of the constituent documents. Here we need to look at each specific case separately. Obvious situations of indirect participation in a company seem to be a chain of shareholding, confirmed by information from available sources - for example, trade and other registers and not encumbered, for example, by trust agreements. In practice, such obviousness in its pure form is rare - for example, if the chain ends with a public company and it is not possible to establish the final beneficiary. A more common situation is when individuals - the real owners of the business - are the beneficiaries of the trust.