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The know your customer or know your client (KYC) guidelines and regulations for financial services require that professionals try to verify the identity, suitability, and risks involved with maintaining a business relationship.
Legal affairs
National regulatory framework regarding AML and effective date of the regulations
In the Russian Federation, the regulatory framework in the field of combating money laundering is governed by the Federal Law of August 7, 2001 No. 115-FZ "On Countering the Legalization of Illegal Earnings (Money Laundering) and the Financing of Terrorism", which came into force on February 1, 2002 (“Anti-Money Laundering Law”).
National regulator or relevant authority for AML controls
The federal executive body responsible for combating the legalization (laundering) of illegal earnings, the financing of terrorism, extremist activities and the financing of the proliferation of weapons of mass destruction in the Russian Federation is the Federal Service for Financial Monitoring (Rosfinmonitoring).
At the same time, in the area of FinTech, Rosfinmonitoring carries out its functions in close cooperation with the Bank of Russia. In particular, requirements for credit and non-credit financial institutions in the field of identification of customers, their representatives, beneficiaries and beneficial owners are approved by the Bank of Russia in agreement with Rosfinmonitoring.
Customer Due Diligence
Conduct of a typical KYC identification process
Organizations carrying out transactions with funds or other property are required to identify the customer, customer representative and (or) beneficiary before accepting services, and also take internal control measures (subpar. 1 of par.1 of Article 7 and subpar. 3.2 of par. 1 of Article 7 of the Anti-Money Laundering Law).
In addition, the Bank of Russia has developed the Know Your Client platform, within which the Bank of Russia classifies legal entities / individual entrepreneurs (with the exception of credit organizations, branches of foreign banks, state bodies and local governments) registered in accordance with the legislation of the Russian Federation as risk groups for committing suspicious transactions (part 4 of Article 9.1 of the Federal Law No. 86-FZ dated July 10, 2002 "On the Central Bank of the Russian Federation (Bank of Russia)").
When exercising internal control, from the moment they receive the specified information from the Bank of Russia, credit organizations and branches of foreign banks are entitled to use as an additional factor influencing the assessment of the degree (level) of risk of commission by a customer – a legal entity / individual entrepreneur (with the exception of credit organizations, branches of foreign banks, state bodies and local governments) registered in accordance with the legislation of the Russian Federation, suspicious transactions, information about the classification of such a customer into one of the risk groups for carrying out suspicious transactions (part 2 of Article 7.6 of the AML).