It is planned to legislatively impose on notaries the obligation to combat the laundering of criminal funds

It is planned to legislatively impose on notaries the obligation to combat the laundering of criminal funds. This was a consequence of the appearance on the market of a laundering scheme with their participation, according to which banks blocked transactions worth more than 2.6 billion rubles this year alone. However, financial market participants are confident that banks have learned to effectively combat this scheme even without the new law. Lawyers believe that under the guise of fighting it, the state wants to shift its functions to notaries and lawyers.

On Thursday, November 2, the State Duma Finance Committee recommended including in the work program for December a bill amending the law on money laundering in terms of improving the mechanisms for the participation of notaries in the fight against money laundering. As stated in the explanatory note, “schemes for individual notaries to issue writs of execution for the forced collection of significant amounts under contracts for the purpose of legalizing funds obtained by criminal means have become widespread.” The volume of such dubious transactions in 2022 alone exceeded 3 billion rubles. At the same time, since banks were given the right to refuse to carry out such transactions in January 2023 if there are suspicions of their connection with legalization, illegal financial transactions have been “suppressed” by 2.6 billion rubles.

In order to stop the possibility of using this money laundering scheme, the authors of the bill propose to legislate the requirement for notaries to comply with anti-laundering measures. These are planned to include actions that are related to financial transactions and the list of which will be separately fixed at the legislative level. In addition, notaries will be given the right to refuse to perform not only a writ of execution, but also other notarial actions if there are reasonable grounds to believe that their execution can be used for the purpose of money laundering. Notaries will also be required to provide the authorized government agency with information about cases of refusal to perform a notarial act.

Market participants note that the problems with the described scheme have been practically resolved after banks are given the right to block such transactions. Sberbank said that such schemes are successfully identified and stopped. “Such schemes exist, but they are practically not widespread, since the vast majority of notaries value their reputation,” they noted. Deputy Head of the National Financial Market Council Alexander Naumov notes that, according to the Bank of Russia, the Know Your Client service (KYC Platform) has significantly reduced the likelihood of using schemes with executive documents of notaries. “If the bank receives a writ of execution from a notary for a client with a high level of risk in the KYC Platform, then the bank does not execute it,” he explained. If the client is a low or medium risk, then the bank executes his order, so the KYC Platform does not completely close the scheme. “But there are few such operations, and the client’s risk will immediately be changed from low to high,” explains Alexander Naumov.

As Alexander Linnikov, founder of the Linnikov and Partners law firm, notes, the scheme with notarial writs of execution is simpler than using court decisions and writs of execution. “In the latter case, the process takes a long time, since in order to give the operation the appearance of reality and legality, it is necessary to go through all the authorities, obtain a judicial act and a writ of execution that has entered into legal force, and only after that contact the bank. In the case of a writ of execution, it is enough to fix this method of resolving the dispute in the contract,” he explained. At the same time, according to him, the main calculation is made on the speed of execution and on the fact that the bank will not delve deeply into the essence of the issue and will make the payment automatically. According to him, the state is trying to assign to notaries and lawyers the functions of law enforcement agencies and bank compliance services that are unusual for them. “Notaries and lawyers must, first of all, protect the trust of their clients, and not become another channel for transmitting data to Rosfinmonitoring or other authorized bodies,” Mr. Linnikov is confident. This approach, in his opinion, threatens to completely discredit the institution of attorney-client privilege and the final loss of confidence in the objectivity and independence of the notary.

Maxim Builov