5 Feb 2018 19:08

Russian Justice Ministry drafts bill combatting siphoning of money abroad via enforcement proceedings - source

MOSCOW. Feb 5 (Interfax) - The Russian Justice Ministry has drafted a bill which is expected to provide opportunities to prevent illegal siphoning of money abroad via recovery of funds taking place within enforcement proceedings, a source from the government's financial and economic blocs told Interfax.

The proposal calls for making changes to the "Law on Enforcement Proceedings." Specifically, it proposes that in the event of a direct transfer of funds under a recovery order, these funds must be transferred only to an account opened in a Russian bank, whereas at present, no territorial restrictions are in effect, the source said.

In an explanatory note to the bill, the Justice Ministry indicates the existence of money laundering schemes via lawsuits filed by foreign companies against residents of Russia. Within these schemes, money is collected by means of a sham contract.

Following a court's ruling in favor of a foreign company, the enforcement order is sent to bailiffs for execution. After funds are recovered, they are transferred to the plaintiff's account abroad. The ministry believes that legislative changes may curtail the use of this type of mechanism for siphoning money from Russia, the source said.

In February 2017, the Russian Central Bank published recommendations for banks in dealing with clients involved in processes connected with court rulings and recovery of funds by the Russia Federal Bailiffs Service. The regulator believes that these processes may be suspicious.