Boris Titov did not support tougher penalties for creating financial pyramids

Boris Titov, Commissioner for the Protection of Entrepreneurs’ Rights under the President of Russia, did not support the new bill on pyramid schemes, which involves tougher penalties for their creation. This became known from a letter that is at the disposal of Vedomosti.

The explanatory note to the bill cites the data of the legislation of other countries, for example, Armenia, which provides for more severe punishment for financial pyramids. Titov believes that in Russia there is an extremely meager practice of applying Art. 172.2 of the Criminal Code of the Russian Federation (organization of activities to raise funds and (or) other property), as well as the concept of a financial pyramid is significantly different from the wording in other countries. This “does not allow us to assert with a sufficient degree of certainty the insufficiency of the sanctions provided for in it.”

The proposed version of Art. 172.2 of the Criminal Code of the Russian Federation is subject to revision in terms of legal technique in order to create legal certainty, Titov believes. Thus, in the current version of the article, only raising funds in large amounts is criminalized, while the new version takes into account “activities to raise money or other property in any amount.”

The phrase “organization of activities to generate income” is also subject to specification, since it is not clear who should derive income – the person held criminally liable, or ordinary investors in the financial pyramid, or one of the group of organizers, and so on. Titov also proposed to unify the use of synonymous terms “money and other property”, “funds” and “assets”.

In conclusion, Titov says that the article being drafted does not specify that the distributor of an advertisement for a pyramid scheme must know in advance whether it is a financial pyramid or a bona fide investment project.

State Duma deputies proposed to amend Art. 172.2 of the Criminal Code of the Russian Federation April 13, 2023 About this wrote Interfax. For organizing or managing a financial pyramid, a fine of 1 to 3 million rubles is expected, as well as restriction of freedom for up to five years with confiscation of property. If the same acts are committed by a group of persons by prior agreement or repeatedly, a restriction of freedom for a period of three to seven years with confiscation of property is provided.