Russia’s Criminal Code and Criminal Procedure Code amended with respect to white-collar crime proceedings

24.01.2019

Legal update No 661

Bryan Cave Leighton Paisner (Russia) LLP, formerly Goltsblat BLP in Russia, advises that, on 27 December 2018, the President of the Russian Federation signed a Federal Law “On Amending Articles 76.1 and 145.1 of the Criminal Code and Criminal Procedure Code of the Russian Federation” relating to white-collar (economic) crime proceedings.

The amendments focus primarily on release from criminal liability and termination of criminal prosecution if damage is reimbursed. For the first time since Criminal Code Article 76.1 came in, termination for damage reimbursement is made available for certain charges of theft.

Termination is now permitted in criminal cases concerning infringement of patent, invention, copyright and related rights and specialised fraud (in lending, entrepreneurship, etc.), misappropriation, embezzlement and infliction of financial damage through deception or abuse of trust. The termination option on these grounds applies to non-qualified (“simple”) corpora delicti crimes mentioned above. Previously, damage reimbursement was just a mitigating factor in relation to such crimes.

Also, new grounds have been introduced for release from criminal liability under Article 145.1 of the Criminal Code (Failure to pay salaries). Once the federal law on criminal liability for failure to pay salaries or make other payments comes into force, first-time offenders may enjoy such release if they repay the existing debt, together with interest due, in full and within two months of the criminal case being initiated.

The list of criminal cases launched solely on the basis of an injured party’s complaint but that may not be terminated for reconciliation with them (that is, private-public prosecution cases) has been extended. Such crimes now also include obtaining a loan illegally (part 1, Article 176), abuse of power (part 1, Article 201 of the Criminal Code) and criminal cases for maliciously evading settlement of accounts payable (Article 177, ibid), making illegal use of means of identification of goods (works or services) (Article 180, ibid) and maliciously evading disclosure or provision of information (Article 185.1, ibid).

Even so, if the crime injures the interests of a government/municipal unitary enterprise, government corporation, government company or commercial entity with government/municipal involvement in its authorised (pooled) capital (share fund) or if government/municipal property is the subject matter of the crime, the above cases now fall under the public prosecution category, so decisions to launch them will be made in the general manner.

The policy to humanise criminal law is being further implemented. Abuse of power has been added to the list of corpora delicti for which a custodial restraining measure is not permitted (Article 201 of the Criminal Code).

Another development is that unjustified measures are prohibited if they might potentially entail suspension of legitimate business of legal entities and individual entrepreneurs. Among these are seizure of electronic data media during investigatory procedures in criminal cases for fraud, including specialised fraud (in lending, entrepreneurship, etc.), misappropriation, embezzlement and infliction of financial damage through deception or abuse of trust in entrepreneurship, and in certain criminal cases on crimes covered by Chapter 22 (White-Collar Crimes) of the Criminal Code.

A new Article 164.1 has been added to the Criminal Procedure Code. It sets forth the specifics of seizing electronic data media and copying data from them and, once in force, will prohibit seizure of electronic data media during criminal case investigations into certain white-collar crimes.

There are exemptions if:

1. a resolution has been issued for forensic examination of electronic data media;

2. such seizure is pursuant to a court ruling;

3. the holder of the electronic medium is not authorised to store and use data contained on such a medium or such data might be used in committing new crimes or copying of such data might, according to a specialist’s statement, result in loss or alteration of the data.

We believe these exemptions provide law-enforcement agencies with fairly broad powers. After all, under Article 38 of the Criminal Procedure Code, the line and course of a criminal investigation are decided by the investigator, who may issue a resolution appointing a forensic examination even if there is no real need for it. The investigative authorities may also obtain a court ruling for investigatory procedures in furtherance of seizure by referring to various federal laws, such as those “On Banks and Banking”, “On Trade Secrets” and so on.

During such investigatory procedures, the investigator may copy information stored on electronic media. In so doing, he must record in the protocol the relevant electronic data media and technical means employed.

From this perspective, while the developments seek to humanise the criminal legislation, the law’s ambiguous wordings mean that not all of them will make it into practice.

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