White-Collar Crime 2019

Last Updated October 21, 2019

Russia

Law and Practice

Authors



Pen & Paper, Attorneys at Law is a firm with offices in Moscow, St Petersburg and an affiliate office in London. A powerful and highly effective criminal law practice brings together experts with rich and diverse experience in both advocacy and law enforcement. This unique combination helps to conduct complex projects, including multidisciplinary and cross-jurisdictional ones, in an exceptionally effective manner. For more than 15 years Pen & Paper has successfully combined expertise in the area of white-collar crime with specialisation in dispute resolution, corporate law and M&A, insolvency, family, inheritance, intellectual and sports law, as well as real estate, construction, investment, anti-monopoly legislation and international private (including sanctions) law. A distinctive feature of the role of the firm's partners and attorneys is direct participation in the management of the firm and experience in lawmaking. It has implemented a significant number of draft laws on the reform of criminal law and criminal procedure. The partners of the firm are respected authorities in the legal community, as well as sought-after experts.

The definition of crime under Russian law is given in Article 14 of the Criminal Code of the Russian Federation (the CCRF): a socially dangerous act, committed with guilt and prohibited by the CCRF on pain of punishment.

Depending on their nature and degree of social danger, crimes are divided into four categories.

Crimes of little gravity are defined as intentional and careless acts, for the commission of which the maximum penalty shall not exceed three years of imprisonment. 

Medium-gravity crimes are deliberate offences for the commission of which the maximum punishment shall not exceed five years of imprisonment, and careless crimes punished with a maximum penalty of three years of imprisonment.

Grave crimes are intentional acts punished with a maximum penalty of ten years of imprisonment.

Especially grave crimes are intentional acts punished with imprisonment for a term exceeding ten years, or a more severe punishment.

In accordance with Article 8 of the CCRF the only ground for criminal liability is the commission of a deed containing corpus delicti. The constituent elements of a crime may be divided between the object (actus reus) and the subject (mens rea). 

The object of a crime is considered to be the set of public relations against which the crime is directed. The actus reus includes the following elements: 

  • a socially dangerous act or omission; 
  • a socially dangerous consequence (if this is provided for by the relevant standard of the CCRF); and
  • the method, place, time, situation, instruments and means of committing a crime.

The subject of the crime is a sane person who has reached the age of discretion. Certain crimes may be committed only by a specified subject (an official, a military servant, a person entrusted with property, etc).

The mens rea of the crime reflects the internal mental attitude, of the accused person, to the act committed by them and its consequences (ie, their guilt). Both intent and negligence can give rise to guilt. 

Crimes defined as white-collar or economic crimes, with rare exceptions (such as Negligence, Article 293 CCRF), may only be committed intentionally.

Other indicia of the subjective element of a crime (motive, purpose, emotional state) do not need to be proved, unless the legislation classifies them as compulsory part of corpus delicti for a particular crime.

A person may be held criminally liable for an unfinished crime. The Russian law defines two types of unfinished crime: preparation of a crime and attempted crime (Article 30 of the CCRF). The term (amount) of penalty for preparation of a crime may not exceed half of the maximum term of the most severe penalty provided for by the relevant Articles for the completed crime (Articles 66 of the CCRF).

Attempted crime of any gravity gives rise to criminal liability, though the punishment cannot exceed three-quarters of the maximum penalty provided for by the relevant Article of the CCRF (Article 66 of the CCRF).

The criminal legislation defines two types of limitation periods. Those that apply to crimes themselves and those that apply to court sentences.

The limitation period begins to run from the day the crime is committed (if the crime is continuous then it runs from the moment the crime is completed, stopped or suppressed), regardless of the moment when its consequences were felt, and until the moment of the entry of a court's ruling into legal force.

A person is discharged from criminal liability if the following terms have expired since the day of commission of the crime:

  • two years from the commission of a crime of little gravity;
  • six years from the commission of a crime of medium gravity;
  • ten years from the commission of a grave crime; and
  • 15 years from the commission of an especially grave crime.

The running of the limitation period shall be paused if the person who has committed the crime avoids the investigation or court trial. In this case, the running of the limitation period willbe resumed upon the time of detention of the said person or their voluntary surrender and confession.

The limitation period for enforcement of the court sentence begins to run on the day of the entry of the court ruling into legal force and until the moment of enforcement of the sentence. The person convicted of a crime shall be released from punishment if the court judgement has not been executed within the limitation period established for criminal liability.

Under Russian law criminal liability is incurred for persons violating the CCRF outside of the Russian Federation.

Citizens of the Russian Federation, and stateless persons permanently residing in the Russian Federation, who have committed a crime against the interests guarded by the CCRF outside the Russian Federation shall be subject to criminal liability in accordance with Russian law, unless a decision of a foreign court exists concerning this crime in respect of these persons.

Foreign nationals and stateless persons who do not reside permanently in the Russian Federation, and who have committed crimes outside the Russian Federation, shall be held criminally liable under the CCRF in cases where the crimes violate the interests of the Russian Federation or a citizen of the Russian Federation, as well as in cases provided for by international agreements of the Russian Federation or other documents of an international nature. However, Russian law-enforcement agencies may only exercise their authority against a foreign citizen who has committed a crime outside the Russian Federation if they have not been convicted by a foreign state and are held criminally liable on the territory of the Russian Federation.

Under current Russian criminal law only physical persons may be held liable. A legal entity may not be held liable under the CCRF under any circumstances. However, the Russian legal framework provides for administrative liability along with criminal liability, the former being incurred in accordance with the Code of Administrative Offences of the RF. Both individuals and legal entities may be held administratively liable. Administrative offences are punishable with a fine, suspension of activity, penal labour or arrest. The first two types of punishment may be applied both to individuals and legal entities. Considering that administrative liability is sometimes characterised as having punitive and preventative effects similar to that of criminal punishments, the European Court of Human Rights considers this liability to fall under the description of criminal liability (Sergey Zolotukhin v Russia,Nemtsov v Russia,Mikhaylova v Russia, etc).

Holding a legal entity administratively liable does not exclude criminal prosecution of the individual who committed the crime and vice versa.

In the event of a merger of legal entities, the newly formed entity shall be held liable for offences committed by its ancestor entities. In the case of acquisition of one legal entity by another, the latter shall be held administratively liable. In these cases administrative liability shall arise regardless of whether the legal entity held administratively liable was aware of the fact of the administrative offence prior to the completion of the restructuring (Article 2.10 of the Code of Administrative Offences of the RF).

For compensation of damages inflicted by an administrative offence, the following grounds are considered: a civil claim in a criminal case, return of alienated property to the owner and voluntary damage compensation.

In the near future a new civil procedure institution – the class action – is to be introduced into Russian legislation. In accordance with the developed bill numerous groups of citizens, given the uniformity of the subject of the dispute, the grounds for the claims, and the identical nature of the remedy, will be able to defend their interests in court through a single chosen representative.

It is assumed that this procedure will be applicable when considering civil claims in criminal proceedings. 

Recent developments in the field of white-collar criminal law are aimed at expanding the scope of persons eligible for criminal liability. In particular, not only public officials and employees of state and municipal companies may be subjects of a crime (accountable for its commission), but also persons performing managerial functions in state companies, state and municipal unitary enterprises, and joint-stock companies where a controlling share is held by the Russian Federation, constituent entities of the Russian Federation or municipal entities.

Legislation is being introduced creating a new liability for abuse of office with regard to the spending of state funds. Thus, a separate provision was introduced in 2015, covering liability for abuse of office with regard to fulfilment of a government defence order. In 2018 liability for abuse of office in procurement of goods, works and services for supplying the state and municipal needs was introduced (Article 200.4 of the CCRF) and bribery of a contract-service employee, a contract manager, or a member of a procurement committee (Article 200.5 of the CCRF).

Despite widely publicised cases against high-ranking officials (federal ministers, heads of constituent entities of the Russian Federation), most of the criminal cases involving corruption crimes are still initiated against officials of low and medium rank. The main punishments are fines, disqualification from holding certain positions or engaging in certain activities and imprisonment.

Investigation of white-collar and economic crimes is carried out by the Investigative Committee of the Russian Federation. A number of such crimes may be investigated by investigative bodies of the Ministry of Internal Affairs (the MIA) and the Federal Security Service (the FSS). Investigative work aimed at detection, prevention and exposure of white-collar crimes is carried out by bodies of the MIA and the FSS. 

Enforcement of court-imposed punishment for white-collar and economic crimes is performed by various bodies in accordance with their competencies. Punishment in the form of a fine is enforced by bailiffs and enforcement officers. A person’s disqualification to hold certain positions and engage in certain activities shall be enforced by probation officers. Imprisonment shall be enforced by the Federal Penitentiary Service of the RF. There are correctional facilities for convicted officials and law-enforcement officers. All of the punishment-enforcement bodies are subordinate to the Ministry of Justice of the Russian Federation.

Currently prosecution authorities are not authorised to conduct investigation of criminal cases or to enforce punishment. They oversee compliance by the bodies performing law-enforcement intelligence operations and preliminary investigation, as well as bailiffs and administrations of punishment-enforcement bodies.

Criminal cases involving white-collar and economic crimes are initiated per standard procedure, stipulated by Article 140 of the Code of Criminal Procedure of the Russian Federation (the CCPRF). A compulsory condition for the institution of a criminal case is the presence of the cause and the grounds.

Possible causes include:

  • a report of a crime, which may be filed either in spoken or in written form (unless it’s anonymous);
  • self-disclosure, the person's voluntary report of the crime they have committed;
  • a report of the committed or the prepared crime received from other sources; and 
  • an order of the prosecutor to redirect the case files to the preliminary investigation body for making a decision on criminal prosecution. 

Existence of sufficient proof to indicate the elements of a crime are the grounds for initiation of a criminal case.

Following consideration of the report of a crime, the preliminary investigation body shall make one of the following decisions:

  • to initiate a criminal case;
  • to refuse to initiate a criminal case; or
  • 3) to hand over the report in accordance with the jurisdiction.

Article 52 of the CCPRF stipulates the particularities of criminal proceedings with regard to particular categories of person (lawmakers, judges, prosecutors, investigating officers, election-committee members and attorneys). The procedure for initiation of criminal investigations, application of enforcement measures and investigation with regard to these persons is more complex regardless of the type of crime.

As already mentioned, legal entities are not subject to criminal liability, this does not, however, exclude the possibility of investigative activities with regard to their directors or employees.

Investigative bodies are authorised to perform all of the legal investigative actions aimed at establishing the facts subject to be proven. Searches and seizures are usually conducted within the scope of criminal investigation of white-collar and economic crimes. These particular investigative actions are used for legal seizure and inspection of corporate documentation, including electronic databases. 

For instance, information that there are documents that may be of value to the criminal investigation in some place, or in possession of some person, constitutes sufficient grounds for search. In the course of the search any rooms may be pried open, even if the owner refuses to unlock them voluntarily. Any documents discovered during the search are presented to witnesses and other persons present during the search. If they are seized, they are packed and sealed at the search site, which is additionally confirmed with the signatures of the aforementioned persons.

Searches at the places of residence of lawyers, as well as searches and seizures of documents containing secret information protected by the law, may only be performed upon authorisation from the court.   

An investigator is authorised to conduct questioning of both the suspect of the criminal investigation and other persons, regardless of their official capacity. The suspect has the right to withhold evidence. Article 188 of the CCPRF provides for the summoning for interrogation of other persons. The witness and the victim shall be summoned for interrogation by a writ specifying who is summoned, and in what capacity, to whom and at what address, the date and the hour of the interrogation, and the consequences of the failure to appear without a valid excuse. The writ shall be handed to the person who is summoned for interrogation, against their signed acknowledgement, or it shall be forwarded to them. The witness has the right to refuse to testify against themselves or their immediate relatives. Lawyers, priests and other persons may be summoned as witnesses and questioned as to the circumstances which have become known to them in the course of performing their professional duties.

Under current Russian legislation proof shall be collected in the course of the criminal court proceedings by the inquirer, the investigator, the prosecutor and the court by way of investigative and other procedural actions. Documents or other information obtained as a result of an internal investigation may be presented before the investigator or the court, so that it can be attached to the criminal case as proof. Investigative bodies and courts must verify the documents and give an assessment of their evidentiary value; they must also provide reasoning for their decision to take the results of the internal investigation into consideration.

The Russian Federal Law On Countering Corruption states that the means of corruption prevention within an organisation may include entrusting of structural units or officials with prevention of corruption and other types of offences, the collaboration of the organisation with the authorities and the prevention and management of conflicts of interest. However, there are currently no state regulations making internal investigations compulsory for companies, or determining their procedures.

Criminal procedure law provides for international co-operation in the field of criminal judicial proceedings (Article 453 of the CCPRF).

Criminal legislation provides for the possibility of extradition. The Russian Federation may direct an inquiry for the extradition of a person for criminal prosecution, or for enforcement of a sentence pursuant to an international agreement with a foreign state, or based on a written undertaking by the General Prosecutor of the Russian Federation to extradite persons to this state in the future on the basis of the principle of reciprocity in conformity with the legislation of the Russian Federation. The person extradited by a foreign state may not be detained, involved as a defendant or convicted without the consent of the state which has extradited them, or handed them over to a third state, or for a crime not specified in the inquiry for extradition.

However, in accordance with Article 13 of the CCRF citizens of the Russian Federation who have committed crimes in foreign states shall not be subject to extradition to those states.

Depending on the nature and the gravity of the offence, the criminal prosecution, including the court hearings, may be performed in a public, private or a mixed-type procedure.

Private prosecution cases are initiated only upon application by the victim, or their legal representative, and are subject to cessation due to conciliation (or settlement) between the victim and the accused. 

Criminal proceedings of a mixed type are initiated only upon application by the victim, or their legal representative, but are not subject to cessation due to conciliation between the victim and the accused. Most economic crimes, including the ones related to a commercial company conducting economic or other activity, are considered to be of mixed type. Crimes that impinge upon the interests of a state or municipal entity, state corporation, state company or commercial organisation with shares owned by a state or municipal entity, if the object of the crime was state or municipal property, do not qualify for mixed-type prosecution.

All other criminal cases are subject to public prosecution.

If the crime is directed against the interests of a commercial entity, and has caused harm only to the interests of that entity, which is not a state or a municipal entity, and has not caused harm to the interests of other organisations, as well as to the interests of citizens, the public or the state, then the criminal case is initiated only upon application from the head of the organisation or with their consent.

Russian law provides for the dismissal of criminal cases and criminal prosecutions concerning crimes of little and medium gravity. One of the grounds for such a decision is the conciliation of the parties (Article 25 of the CCPRF).

In addition, if a person has committed a crime of the respective categories for the first time, the criminal prosecution may be terminated on grounds of active repentance (Article 28 of the CCPRF). The conditions are voluntary surrender, active co-operation with the investigation and compensation and reparation of damages.

The law also provides for release from criminal liability by payment a court fine (Article 25.1 of the CCPRF). It may be applied along with damage compensation or other means of reparation.

Pursuant to the court ruling, the enforcement of punishment may be postponed, for instance, until the child of a convicted person reaches the age of 14 or until recovery of the convicted person’s health.

Under current legislation a plea agreement (or collaboration agreement) is one between the prosecution and the defence, in which the parties agree on the terms of the accused person's liability depending on their actions after the initiation of a criminal case or the indictment.

A collaboration agreement is drawn up and signed by the prosecutor, the accused and their defence attorney. The agreement contains a description of the actions the accused undertakes to perform in order to co-operate with the investigation of the crime, the criminal prosecution of other accomplices in the offence and searches of relevant property acquired as a result of the offence.

Provided the accused duly performs the obligations under the agreement and pleads guilty, the court hearing is held under a special procedure (as stated in Chapter 40.1 of the CCPRF) without examination and evaluation of the evidence related to the criminal case. The punishment imposed under the special procedure may not exceed a half of the maximum term for the committed crime. 

Russian criminal law provides corpus delicti of crimes under Chapters 21—23 of the CCRF, the totality of which mostly covers the field of corporate criminal law and corporate fraud.

Abuse of office (Article 201 of the CCRF) is the crime against the interests of commercial organisations and is defined as the use of authority, by a person discharging managerial functions, in a profit-making (or any other) organisation, to the detriment of the legal interests of this organisation. An essential consequence of this deed involves substantial violation of the rights and legal interests of individuals or organisations, or of the legally-protected interests of the society or the state. Maximum punishment is imprisonment for a term of up to four years.

One of the types of fraud (stealing of other people's property or the acquisition of the right to other people's property by fraud or breach of trust) is fraud in the sphere of entrepreneurial activity (Article 159 parts 5—7 of the CCRF). Perpetrators of entrepreneurial fraud are individual entrepreneurs and board members of commercial organisations. The mens rea is direct intention and lucri causa. Maximum punishment is imprisonment for a term of up to five years with or without personal restraint for a term of up to one year. A more severe punishment is incurred for fraud committed on a large scale (exceeding RUB3 million). Other corporate white-collar crimes include, among others, misappropriation or embezzlement (Article 160 of the CCRF), illegal entrepreneurial activity (Article 171 of the CCRF), submission of inadequate records by a supervisory body or of inadequate information to the bodies performing state registration of legal entities and tax crimes.

The criminal legislation provides for specific liability for bribery (ie, corrupt practices) and for influence peddling.

Taking a bribe (Article 290 of the CCRF) for rendering services in favour of the bribe-giver or persons they represent, if such services are within the scope of an official’s powers or that official, by virtue of their professional capacity, may further such actions shall be punishable with imprisonment for a term of up to three years and, optionally, a fine of ten to 20 times the value of the bribe. Connivance in office and overall patronage are also covered by Article 290.

Taking a bribe for illegal actions shall be punishable by a maximum penalty of imprisonment for a term of three to eight years with, optionally, a fine of 40 times the value of the bribe and, also optionally, disqualification from holding certain positions or engaging in certain activities for a term of up to five years.

Taking a bribe from an organised group, or involving extortion, or on an especially large scale (exceeding RUB150,000) shall be punishable by a maximum penalty of imprisonment for a term of seven to 12 years with, optionally, a fine of 60 times the value of the bribe and, also optionally, with disqualification from holding specific offices or engaging in certain specific positions or in certain activities for a term of up to ten years.

The most severe penalty is imposed for taking a bribe on an especially large scale (exceeding RUB1 million): imprisonment for a term of eight to 15 years with, optionally, a fine of up to 70 times the value of the bribe and, also optionally, with disqualification from holding certain positions or engaging in certain activities for a term of up to fifteen years.

Liability in all specified cases arises for bribery of a foreign official, defined as any appointed or elected person holding any office in a legislative, executive, administrative or judicial body of a foreign state, or any other person performing any public functions for a foreign state, including for a public institution or a public enterprise.

Bribery (Article 291 of the CCRF) of a foreign official or an official of a public international organisation in person or through an intermediary shall be punishable with imprisonment for a term of up to two years with, optionally, a fine of five to ten times the value of the bribe.

Giving a bribe for the performance of illegal actions shall be punishable by a maximum penalty of imprisonment for a term of up to eight years with, optionally, a fine of up to 30 times the value of the bribe and, also optionally, with disqualification from holding certain positions or engaging in certain activities for a term of up to five years.

Bribery on a large scale and on an especially large scale is subject to a more severe penalty.

Similar liability is incurred for bribery in the private sector (influence peddling, Article 204 of the CCRF).

The Federal Law 273-FZ, 2008 On Counteracting Corruption provides for the responsibility of organisations to devise and take measures for the prevention of corruption (Article 13.3).

Measures to prevent corruption, taken by an organisation, may include:

  • entrusting of structural units or officials with prevention of corruption and other offences;
  • the enterprise’s co-operation with law-enforcement agencies;
  • development and implementation of standards and procedures aimed at ensuring the good faith operation of the organisation;
  • adoption of a code of ethics and conduct for the organisation’s employees;
  • conflict of interest prevention and management; and
  • guarding against unofficial reporting and use of forged documents.

Methodological recommendations for the development and implementation of measures for prevention and countering of corruption (approved by the Russian Ministry of Labour and Social Protection), addressed to all and any organisations regardless of type of property, type of legal entity and field of activity, stipulate that anti-corruption policy and other documents of an organisation regulating matters for the prevention and countering of corruption shall be preferably taken in the form of local instruments to ensure compliance by all of the organisation's employees.

The contents of the anti-corruption policy of a specific organisation shall correspond to the specific characteristics of this organisation and peculiarities of the environment in which it operates.

The head of an organisation will be held resposnsible for the premeditated non-performance of such duties in cases where that non-performance causes material damage to the organisation's interests, or if such conduct is related to complicity in a crime or may give rise to criminal liability.

Market manipulation (Article 185.3 of the CCRF) is defined as premeditated distribution through mass media, including electronic media and the internet, of knowingly false information; or effecting transactions with financial instruments, foreign currency and goods; or performing any other premeditated actions prohibited by the legislation on counteracting the unlawful use of insider information and market manipulation. Criminal liability may arise if these actions result in the price, demand, supply or traded value of the financial instruments, foreign currency and/or goods deviating from, or being maintained on, a level substantially different from that established without the specified unlawful actions, and if these actions inflict large-scale damage to citizens, organisations or the state or involve large-scale extraction of revenue or loss-avoidance (exceeding RUB3.75 million). These actions shall be punishable by a maximum penalty of imprisonment for a term of up to four years, with or without a fine, and with or without disqualification from holding certain positions or engaging in certain activities.

Unlawful use of insider information (Article 185.6 of the CCRF) is defined as premeditated use of such information for transactions with financial instruments, foreign currency and/or goods relevant to such information, at the cost of the user or at the cost of a third party, as well as premeditated use of insider information by giving recommendations to third parties, or obligating or inducing by other means the purchase or sale of financial instruments, foreign currency and/or goods. Criminal liability is incurred, if such use inflicts serious damage to citizens, organisations or the state or involves large-scale extraction of revenue or loss-avoidance (exceeding RUB3.75 million). These actions are punishable by a maximum penalty of imprisonment for a term of two to four years with a fine and disqualification from holding certain positions and engaging in certain activities.

Illegal banking (Article 172) is defined as banking without registration or special permit (licence) in cases when such a permit (licence) is mandatory, if this action inflicts large-scale damage to citizens, organisations or the state, or involve large-scale extraction of revenue or loss-avoidance (exceeding RUB3.75 million) it is punishable by a maximum penalty of imprisonment for a term of up to four years with a fine or without such fine.

The CCRF defines two kinds of tax fraud: tax evasion by a physical person (Article 198) and tax evasion by an organisation (Article 199). The crime is defined as non-submission of a tax declaration (return) or other documents whose submission is obligatory under the laws of the Russian Federation on taxes and fees, or by way of inclusion into the tax declaration (return), or other documents, of knowingly false information.

Large-scale tax evasion by an organisation shall be punishable by a maximum penalty of imprisonment for a term of two years with disqualification from holding certain positions or engaging in certain activities for a term of up to three years or without such a disqualification. Large scale is defined as the amount of taxes exceeding RUB5 million for the period of three consecutive financial years, provided that the share of taxes, fees and insurance premiums payable exceeds 25% of the total taxes payable or exceeds RUB15 million.

Especially large-scale tax evasion by an organisation shall be punishable by a maximum penalty of imprisonment for a term of up to six years with disqualification from holding certain positions or engaging in certain activities for a term а up to three years or without such disqualification. Especially large scale is defined as an amount exceeding RUB15 million within a term of three consecutive financial years, provided that the share of taxes payable exceeds 50% of the amount of total taxes payable or exceeds RUB45 million.

In order to hold a person criminally liable for such crimes it is mandatory to prove the direct intention of the legal or physical person to evade taxes.

Under Russian legislation criminal liability is incurred for offences related to the financial records of credit and financial organisations.

Falsification of the financial accounting documents and records of a financial organisation (Article 172.1 of the CCRF) is defined as the introduction into the accounting documents and records of a credit organisation, insurance organisation, a professional player on the securities market, a non-public pension fund, an investment fund managing company, a unit investment fund, a clearing organisation, a trade organiser, a credit consumer co-operative, a microfinance organisation, a mutual insurance society or a joint-stock investment fund, of knowingly incomplete or false information on the transactions, obligations or property of an organisation or on the financial condition of the organisation, as well as confirmation of the validity of such information as well as the publication or disclosure of such information. These actions are punishable by a maximum penalty of imprisonment for a term of up to four years with disqualification from holding certain positions or engaging in certain activities for a term of up to three years.

The non-introduction into the financial accounting documents and records of a credit organisation of information on deposited monetary funds (Article 172.3 of the CCRF) is defined as concealment of monetary funds actually deposited by physical persons or individual entrepreneurs as well as concealment for the benefit of the specified persons pursuant to a bank deposit agreement or a bank account agreement by the non-introduction into accounting documents and records of a credit organisation of information on those monetary funds on a large scale (exceeding RUB3 million). Such actions are punishable by a maximum penalty of imprisonment for a term of up to four years with disqualification from holding certain positions or engaging in certain activities for a term of up to three years.

Under the CCRF liability is incurred for restriction of competition (Article 178). The crime is defined as the signing, by competing business entities, of a competition restrictive agreement (the formation of a cartel), if this action inflicts large-scale damage to citizens, organisations or the state (exceeding RUB10 million) or leads to extraction of revenue on a large scale (exceeding RUB50 million). Such actions shall be punishable with imprisonment for a term of up to three years with disqualification from holding certain positions or engaging in certain activities for a term of up to one year or without such a disqualification.

Administrative liability is incurred for legal persons (Article 14.32 of the Administrative Offences Code of the RF). An offence may be defined as the signing by a business entity of an agreement recognised as forming a cartel (part 1), the signing of an agreement between a trading authority and clients who participate in that trade (part 2), the signing of a "vertical" agreement or participation therein (part 3) or the co-ordination of the economic activity of business entities prohibited by the legislation (part 5). Specific types of business activity qualified as competition-law offences are stipulated by the Federal Law 135-FZ On Protection of Competition. Imposition of sanctions in the form of a fine is incurred for legal persons.

Under the CCRF liability is incurred for the sale (or the production, storage and transportation with the aim of sale) of goods and services, performances of works and rendering of services which do not meet the requirements for life safety and health of consumers (Article 238). Such actions are punishable with imprisonment for a term of up to two years. In cases where these actions are committed by an organised group or with regard to goods intended for children under six years of age, or have led to infliction by negligence of severe bodily damage or death, they are punishable by a maximum penalty of up to six years of imprisonment with a fine or without a fine. If the said actions resulted in the deaths of two or more persons they are punishable by a maximum penalty of up to ten years of imprisonment.

A separate provision provides for criminal liability for distribution of falsified, poor-quality or unregistered pharmaceutical and medical products and distribution of falsified biologically active supplements (Article 238.1).

Unlawful access to computer information (Article 272 of the CCRF) shall constitute a crime, if this action has led to destruction, blocking, modification or copying of computer information. The maximum punishment is up to two years of imprisonment. A more severe penalty will be imposed if these actions are committed out of commercial interest or inflict large-scale damage or involve abuse of office.

Computer information fraud (AArticle 159.6 of the CCRF)is defined as the theft of other persons’ property or the acquisition of a right to other persons’ property by entering, deleting, blocking or modifying of computer information or any other interference in the operation of or means of storage, processing or transmission of computer information or telecommunication networks. Such actions are punishable by a maximum penalty of penal labour for a term of up to two years. A more severe penalty shall be imposed if such actions are committed by a group of people in collusion, or if they inflict material or large-scale damage, or involve electronic money.

Unlawful receipt and disclosure of information constituting commercial, tax or banking secrets (Article 183 of the CCRF) by way of theft of documents, bribery or threats, as well as by other illegal means, shall be punishable by a maximum penalty of imprisonment for a term of up to two years. A more severe penalty shall be imposed if such actions are committed by a person, who has been entrusted with such secret in a professional capacity, or in cases of infliction of large-scale damage or grave consequences.

The main offences related to financial/trade/customs sanctions are:

  • avoidance of obligations to repatriate monetary funds in foreign currency or in the currency of the Russian Federation (Article 193 of the Criminal Code);
  • currency transactions involving the transfer of funds, in foreign currency or the currency of the Russian Federation, to accounts of non-residents with the use of falsified documents (Article 193.1 of the CCRF);
  • evasion by an organisation or a physical person of customs fees payable (Article 194 of the CCRF);
  • smuggling of cash and/or monetary instruments (Article 200.1 of the CCFR);
  • smuggling of alcohol products and/or tobacco products (Article 200.2 of the CCRF).

Article 316 of the CCRF provides for liability for concealment of especially grave crimes when that concelament had not been promised in advance of the crime. Thus, the predicate crime may only be an especially grave crime.

Concealment of crimes is defined as a previously unpromised action committed after the predicate crime. If a person is involved in a crime, then their actions are qualified as complicity and may not be considered concealment, which is why the person may not be held liable for both concealment and the predicate crime. Additionally, a person shall not be held criminally liable for previously unpromised concealment of a crime committed by their spouse or immediate family.

Article 316 of the CCRF provides for punishment in the form of a fine in the amount of up to RUB200,000 or in the amount of the wage or other income of the convicted for a period of up to 18 months, or penal labour for a term of up to two years, or arrest for a term of up to six months, or imprisonment for a term of up to two years.

Aiding and abetting are forms of complicity in a crime and give rise to criminal liability.

An abettor is defined as a person, who has induced another person to a crime by persuasion, bribery, threat or any other means. An aider is defined as a person who has aided the crime by providing advice, instructions, information, means or instruments of crime or by elimination of obstacles, as well as a person, who has previously promised to conceal a criminal, the means or instruments of crime, the traces of crime or items procured in a criminal manner, as well as a person who has previously promised to purchase or sell such items.

Aiders and abettors shall be punished in accordance with the relevant Article of the CCRF providing for liability of the perpetrator.

The CCRF defines two kinds of crimes related to money laundering. Article 174 of the CCRF provides for criminal liability for legalisation (laundering) of monetary funds or other property acquired by other persons in a criminal manner. Article 174.1 provides for criminal liability for legalisation (laundering) of monetary funds or other property acquired by a person as a result of them committing a crime themselves.

Any offence specified in the CCRF and linked to the source of legalised property may be the main (predicate) crime. The specific type of predicate crime depends on the object of legalisation (laundering). An analysis of Russian case law has shown that the most frequent predicate offences are various types of fraud (Article 159), misappropriation or embezzlement (Article 160) and bribe-taking (Article 290). This may be attributed to a large share of theft and corruption crimes among the totality of committed crimes, especially in the economic sphere.

The obligation to counteract legalisation of criminal proceeds is provided for by Federal Law 115-FZ On Counteracting Legalisation (Laundering) of Criminal Proceeds and Financing of Terrorism. The law provides for internal control –ie, implementation by organisations effecting monetary transactions of rules of internal control, including compliance with the requirements of legislation on identification of clients, their representatives, beneficiaries and beneficiary owners; on documenting information and its submission to the authorised agency; on storage of documents and information; on preparation and training of personnel as well as of targeted rules of internal control in cases stipulated by the law.

Non-compliance with the requirements of the legislation on countering legalisation (laundering) of criminal proceeds and financing of terrorism constitutes elements of an administrative offence (Article 15.27 of the Administrative Offences Code of the RF) and shall be punishable with a fine or an administrative suspension of activity.

Taking into account the special characteristics of white-collar and economic crimes, we shall outline the following grounds for exemption from criminal liability.

Active repentance: a person committing a crime of little or medium gravity for the first time may be exempted from criminal liability if after commission of the crime they voluntarily surrender and confess, co-operate with the investigation, repair or otherwise make up for damages inflicted by the crime. In cases of white-collar and economic crimes making up for damages is defined as property compensation for damages as well as other measures aimed at the restoration of rights to the affected person, as well as of the legal interests of the person, the society or the state.

For some crimes the law provides for special grounds for exemption from criminal liability. Particularly, in accordance with Article 219 of the CCRF, the bribe-giver shall be exempted from criminal liability if they actively co-operated for the solution and/or investigation of the crime, as well as if they suffered extortion of bribe on the part of an official (the demand to give a bribe under threat to perform actions which may damage the person’s legal interests), and in cases where, after commission of the crime, the person voluntarily reported the deed to an institution authorised to initiated a criminal case.

Other circumstances for exemption from criminal liability include extreme necessity, substantiated risk, and execution of an order or instruction (excluding manifestly illegal ones). These are applied to white-collar offences under the general rules. 

The law does not contain any provisions, with regard to white-collar or economic crimes, providing for exemptions of specific industries or sectors. Criminal prosecution is initiated in all cases of committed crimes. A more severe penalty is imposed for public persons. In cases of crimes against the interests of commercial organisations, under the general rule criminal prosecution is initiated pursuant to an application by such organisations.

Self-disclosure (voluntary spoken or written reporting by a person of a crime committed by them or with their involvement) is a special mitigating factor when imposing a penalty. In accordance with Article 62.1 of the CCRF in cases of self-disclosure and lack of aggravating factors the term and amount of punishment may not exceed two-thirds of the maximum term or amount of the most severe penalty stipulated by the respective Article of the CCRF.

In accordance with Article 61 of the CCRF other mitigating factors include it being a first-time offence of little or medium gravity; some personal characteristics of the guilty party (minor age, pregnancy, being a parent of minor children); commission of the crime due to adverse life circumstances; as a result of physical or psychological coercion or due to financial, employment or other dependence; commission of a crime in violation of requirements for justifiable defence, detention of a person who has committed the crime, extreme necessity, substantiated risk, execution of an order or an instruction; rendering medical or other aid to the victim immediately after committing the crime; voluntary compensation of property or moral damage inflicted as a result of the crime and other actions aimed at making up for the damage inflicted to the victim. This is a non-exhaustive list. The court may recognise other factors as mitigating at its own discretion (for instance, a full or partial plea of guilty, medical condition, state or institutional awards, etc).

In accordance with Article 9.4 of the Federal Law on Counteracting Corruption a public or municipal official, who has informed the employer, the prosecutor’s office or other public institutions of facts of attempts to induce them to a corruption offence or of facts of other public or municipal officials committing corruption offences, shall be put under state protection in accordance with the legislation of the Russian Federation.

Federal Law 119-FZ On State Protection of Victims, Witnesses and Other Persons Involved in Criminal Proceedings is currently in force. This protection may be ensured by security measures including:

  • personal security and security of housing and property;
  • special means of communication and alarm notification;
  • ensuring confidentiality of information about the protected person;
  • resettlement of a person to a different place of residence;
  • replacement of documents;
  • change of appearance;
  • change of place of work (service) or studies; and
  • temporary placement in a safe location.

One of the universal statutory principles of legal proceedings is benefit of the doubt. In accordance with Article 14 of the CCPRF the accused is deemed innocent until their criminal guilt is proven in accordance with the appropriate procedure and is documented by a final and binding court sentence. The burden of proof and rebuttal in defence of the accused rests with the prosecution. Any unanswered questions surrounding the guiltiness of the accused shall be interpreted in their favour. The accused has no obligation to prove their innocence.

The benefit of the doubt fully applies to persons accused of white-collar and economic crimes.

The standards of proof are also universal. The specific nature of proof in white-collar and economic crimes stems from the fact that apart from finding proof for all other circumstances the investigation shall accurately and fairly define the scope of the authority of the official. It is the comparison of their authority with the act committed by them that enables the investigation to make a conclusion as to the presence of objective elements of the crime.

General rules of imposition of punishment provided for by Article 60 of the CCRF apply to the imposition of punishment for white-collar and economic crimes. The court takes into account the nature and extent of the social danger of the crime, the circumstances of its commission and the profile of the offender, which mitigate or aggravate the crime, as well as the impact of the imposed punishment on correction of the convicted and the living condition of their family.

Given exceptional circumstances the court may impose a punishment below the minimum provided for by the respective Article of the CCRF, impose a more lenient punishment or abstain from imposing an additional type of punishment specified as mandatory.

When imposing a punishment for white-collar and economic crimes the court considers the possibility of the enforcement of criminal conviction and correction against the guilty. This measure is defined as the establishment of a probation period for the convicted, within which they must prove their correction.

Finally, when imposing a punishment in cases heard under special procedure, when the accused pleads guilty, the punishment may not exceed two-thirds of the maximum punishment incurred for the committed crime. In cases where the accused signs a pre-trial agreement on co-operation and complies with its terms, as well as in cases of any additional mitigating factors and lack of any aggravating factors, the imposed punishment may not exceed a half of the maximum punishment.

Pen & Paper, Attorneys at LAw

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Moscow, Russia
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+7 495 234 4959

+7 495 234 4959

info@pen-paper.ru www.pen-paper.ru
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Pen & Paper, Attorneys at Law is a firm with offices in Moscow, St Petersburg and an affiliate office in London. A powerful and highly effective criminal law practice brings together experts with rich and diverse experience in both advocacy and law enforcement. This unique combination helps to conduct complex projects, including multidisciplinary and cross-jurisdictional ones, in an exceptionally effective manner. For more than 15 years Pen & Paper has successfully combined expertise in the area of white-collar crime with specialisation in dispute resolution, corporate law and M&A, insolvency, family, inheritance, intellectual and sports law, as well as real estate, construction, investment, anti-monopoly legislation and international private (including sanctions) law. A distinctive feature of the role of the firm's partners and attorneys is direct participation in the management of the firm and experience in lawmaking. It has implemented a significant number of draft laws on the reform of criminal law and criminal procedure. The partners of the firm are respected authorities in the legal community, as well as sought-after experts.

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