Cooperation of Extremes

Krasnodar, 18 February. 16+ Last week, Sochi hosted the Winter Legal Week 2022 traditionally organized by the pravo.ru portal and Yug Law Bureau. The event was attended by over 200 lawyers from Moscow, St. Petersburg and other Russian regions, and representatives of some major international companies operating in Russia. 

It was the ‘cooperation’ that became the keynote of the gathering both in the informal and official parts. Corporate cooperation, cooperation between companies, and of course relations between business circles and the state were the main themes of the event’s agenda. 

The speech entitled “Coercive financial transparency of lawyers and businesses” delivered by Vladimir Yefremov, partner of Arbitrage.Ru Company arouse big interest and became a subject of heated debate. The spokesperson designated the trends of the ‘anti-laundering’ regulation offered by the Central Bank and the Federal Financial Monitoring Service of the Russian Federation in 2022. 

In order to more efficiently oppose money laundering, now all entrepreneurs and providers of legal services must identify their clients, track the operations, and if some payments are deemed suspicious inform the Federal Financial Monitoring Service. Such acts shall not be considered as violation of the client-attorney privilege. One more novelty is expected to take force this summer – the federal law enacting the Central Bank’s Know Your Customer (KYC) platform will come into legal force. The program based on everyday data about all dubious transactions conducted throughout the country will divide the national business sector to three risk levels: green, yellow and red. 

Clients of the red zone will be fully cut off the banking system. They will not be able to open accounts, perform transactions or transfer money. What is more, they will be deprived of the right to use money from their own bank accounts. 

Clients of the yellow zone will be facing similar, though a little bit weaker, sanctions. 

Speaking about how these novelties may affect the work of law agencies, it should be noted that in addition to the increased document flow, new professional duties, and the risk of a nearly 500,000-rouble-worth penalty, the relations with the client may also suffer, because the latter would not be able to rely upon client-attorney privilege. Anastasia Fomicheva, Head of Siemens Healthcare’s Legal Department, recounted the peculiarities of the work of a large international company. 

“In 2007 when I joined Siemens, I as a Russian lawyer was surprised that the contract had a liability limit clause,” she said. “It was new, incomprehensible and strange for me. But as time went on, I got an interesting answer. If hypothetically we imagine a situation when suddenly obligations provided by all contracts signed by Siemens would be violated without limiting the liability, it would make the company pay unlimited sums of money to its contractors – which may result in bankruptcy. Of course, such situation is unlikely, but this is the viewpoint of international companies: if there is a risk (even theoretical or imaginary), it must be shut.”

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