Determination: In Place But Needs Improvement
Russia’s domestic legislative framework is in place and contains many of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to the scope of Reporting Financial Institutions required to report information (SR 1.1), the due diligence procedures to be applied (SR 1.2), and the framework to enforce the requirements (SR 1.4). Most significantly, key definitions significant to the scope of Reporting Financial Institutions, including Participating Jurisdiction Financial Institution and Financial Assets, are not in accordance with the requirements.
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Russia has defined the scope of Reporting Financial Institutions in its domestic legislative framework in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. Most significantly, Russia’s legislative framework does not explicitly incorporate the definition of Participating Jurisdiction Financial Institution, and the definition of Financial Assets is not in accordance with the requirements. The scope of Reporting Financial Institutions is material to the proper functioning of the AEOI Standard.
Recommendations:
Russia should amend its domestic legislative framework to define Financial Asset using an inclusive approach as contained in the AEOI Standard, rather than using an exhaustive list.
Russia should amend its domestic legislative framework to explicitly incorporate the relevant definitions defining the scope of Reporting Financial Institutions, such as the definition of Participating Jurisdiction Financial Institution.
Russia should amend its legislative framework to incorporate the definition of “managed by” in relation to the definition of Investment Entity.
Russia should amend its domestic legislative framework to require the interpretation of Investment Entity to be consistent with similar language defining “financial institution” in the Financial Action Task Force Recommendations.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Russia has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and has incorporated the due diligence procedures that must be applied to identify them in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. More specifically, Russia’s legislative framework:
does not provide for the interpretation of “change of circumstances” in accordance with the requirements; and
does not define Reportable Jurisdiction Person or Account Holder in accordance with the requirements.
The deficiencies relate to key elements of the AEOI Standard and are therefore material to its proper functioning.
Recommendations:
Russia should amend its domestic legislative framework to ensure that “change of circumstances” is defined in accordance with the AEOI Standard, rather than being restricted to circumstances that lead or may lead to the change of residence for tax purposes.
Russia should amend its domestic legislative framework to define Account Holder in accordance with the AEOI Standard.
Russia should amend its domestic legislative framework to explicitly include the estate of a decedent that was a resident of a Reportable Jurisdiction as a Reportable Jurisdiction Person.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Russia has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
Recommendations:
No recommendations made.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Russia has a legislative framework in place to enforce the requirements in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. More specifically, Russia’s legislative framework:
does not include rules to prevent Financial Institutions, persons or intermediaries from adopting practices intended to circumvent the due diligence and reporting procedures as required; and
does not impose sanctions on Accounts Holders and Controlling Persons for the provision of a false self-certification.
These are key elements of the required enforcement framework and are therefore material to the proper functioning of the AEOI Standard.
Recommendations:
Russia should amend its domestic legislative framework to include rules to prevent Financial Institutions, persons and intermediaries from adopting practices intended to circumvent the due diligence and reporting procedures.
Russia should amend its domestic legislative framework to include sanctions on Account Holders and Controlling Persons for the provision of a false self-certification.
