Important amendments have been made to article 173.1 of the Criminal Code of the Russian Federation, which extend criminal liability for the creation of companies through straw persons now also to individual entrepreneurs (IE). This concerns the so‑called “drops”—persons who provide their passport data for fictitious business registration.
Key innovations:
For registering an individual entrepreneur under a dummy person:
Fine up to 300,000 ₽
Forced labor
Imprisonment up to 3 years
For providing a passport for such registration:
Fine
Mandatory work up to 2 years
Goals of changes:
Fighting illegal tax evasion and money laundering schemes.
Suppression of the activities of “drops” involved in creating a fictitious business.
Protection of the economy from shadow operations and fraudulent schemes.
Recommendations for business:
Make sure the documents are clean when registering an individual entrepreneur or a company.
Avoid using straw persons — the risks of criminal liability have become more serious.
Check counterparties for signs of falseness
How can Acsour help?
We provide legal and consulting support
Verification of the legality of your sole proprietorship or company's registration.
Assistance during business ownership change to minimize risks.
Consultations on compliance with legal requirements.