Treasury Group Manager
Banks have the right to request documents from a company to check its sources of profit. The corresponding right is granted to credit institutions by the legislation. Anna Rybakova, Acsour’s Treasury Group Manager, has outlined for “Raschet” magazine what documents the bank can request, during what timeframe they need to be submitted, and what will happen if you ignore the demand of the credit structure.
Banking operations are regulated by a considerable number of laws and regulations. This includes Federal Law No. 115-FZ “On countering the legalisation (laundering) of the proceeds of crime, and the financing of terrorism” dated August 7, 2001 and Regulation No. 499-P of the Bank of Russia dated October 15, 2015 “On the identification by credit organizations of clients, client’s representatives, beneficiaries and beneficial owners for the purpose of combating the laundering of the proceeds of crime, and the financing of terrorism”.
In accordance with Law No. 115-FZ, banks often ask companies for such extensive information about their activities that there are suspicions as to whether such requirements are lawful. According to the law and Regulation, credit institutions do have the right to identify the client and check any transactions that they find suspicious. But what exactly is said in these statutory documents?
Law No. 115-FZ specifies that when identifying a client, its representative, or beneficiary, as well as when updating business information, the bank has the right to require the submission of the following papers:
Naturally, banks have the right to request papers for current financial transactions. These include, for example, transaction documents: a contract, a purchase receipt, an invoice, and any other documents that justify the receipt or transfer of money. In addition, the bank can ask for documents confirming the provision of services or the delivery of goods. Examples are a cheque, receipt, waybill, or any other documentary evidence explaining what the payment was made for.
If the company pays taxes and salary in another bank, the credit institution has the right to request a tax return for the last period and confirmation of the payment of taxes.
Information containing personal data of third parties may also be requested. After all, by law, banks are required to identify the client’s representative (including the sole executive body) and its beneficiary. They are also required to take reasonable and affordable measures in the circumstances to identify the beneficial owner. If these are individuals (and the beneficial owner is only an individual), and it does not matter whether or not they are employees of the company, then banks are obliged to require information containing their personal data. And clause 14 of article 7 of Law No. 115-FZ establishes that organizations bear the obligation to provide all the information necessary for credit institutions to comply with the requirements of the legislation.
Regulation No. 499-P of the Central Bank of the Russian Federation dated October 15, 2015 specifies the powers of credit institutions to request documentation and information from clients. For example, a bank has the right to require its clients to provide information and documents about their financial position, including accounting reports and tax returns. The credit institution, in its internal control rules, independently determines the quantity and types of documents that it uses to determine the financial position of the client. The Bank may request information about the client’s business reputation and comments from other organizations that have business relationships with it. Clause 2.9 of Regulation No. 499-P allows information to be requested about the sources of the client’s funds and other property. In the internal control rules, the credit institution may also independently determine other types of documents that can be used to determine the client’s business reputation.
It turns out that today the right of banks to request documentation and information is practically unlimited. At least, it is enshrined in legislation, as well as there being no definitive list of documents that have to be provided at the request of a credit institution.
Since there is no legislative list of the documents to be requested, banks independently decide and stipulate in their internal control rules how to check the client and what documents are considered “necessary for the implementation of the requirements of the legislation”. That the list is open is explained very simply: it is impossible to determine in advance the full list of documents that may be needed to understand whether or not this operation is carried out for the purpose of legalizing criminal income.
It is worth noting that compliance with the legislation is not a whim, but an obligation of banks. If representatives of a financial institution do not act within the framework of the law, they may be subject to punitive sanctions. The liability of banks is established by article 15.27 of the Administrative Code of the Russian Federation “Failure to comply with the requirements of the legislation combating the laundering of the proceeds of crime, and the financing of terrorism”.
Under this article, fines reach 1,000,000 rubles, and banking operations can be suspended for up to 90 days. Accordingly, the credit institution may have its license revoked.
Banks try to protect themselves and to thoroughly check the payments made by clients. It turns out that sending letters to clients about providing information is a common practice of credit institutions associated with compliance with laws and with the requirements of the Central Bank. Therefore, there is no point in raising a dispute, trying to agree upon better terms or reduce the list of requested documents – first and foremost, the bank protects its own interests and reputation.
The deadline for preparing information and documents is up to seven working days from the date of the request. If it is not possible to meet the established timeframe for the preparation of information, you should inform the bank in advance about the reasons for the delay and about the time when the documents will be ready. If the reason for the delay is considered objective, the deadline may be extended. If this option is not available, and the bank requires more and more different information and more often, it is more reasonable not to wait for the account to be closed and to switch to the services of another credit institution.
AND IF YOU REFUSE
The failure of the client to provide the information necessary for the credit institution to implement the requirements of the law may be the basis for the bank to refuse to carry out the operation. If the bank has refused twice or more, it is obliged to terminate the contract and close the client’s account. The organization is automatically blacklisted, such list being distributed by the Central Bank of the Russian Federation, and it is likely that such a company will not be able to open an account with another credit institution. The bank can also disable the remote service system (Internet banking). Then the client will be able to manage its account only by submitting paper payment documents, which complicates work, especially when the client is, for example, in Vladivostok, and the bank is in Moscow. And even if the client brings a paper payment document, the credit institution has the right to refuse to carry out the operation. Ultimately, the business is forced to comply with the requirements of banks to submit documents and information, as well as to do so in full and on time.