Russian custodians to report to CBR the non-compliance with the mandatory disclosure of beneficial owners
The Russian legislation envisages certain cases of mandatory disclosure of information on beneficial owners by nominee holders. In particular, upon request of issuers, the Bank of Russia, courts, preliminary investigative bodies, etc.
In case of non-fulfillment of this requirement, the Bank of Russia is entitled to stop or limit for a period up to 6 months the execution of transactions with the non-disclosed securities kept on the nominee holder's securities accounts. At the same time, disclosure of information for corporate actions purposes is not required in case of no intent to participate in a corporate action and if this is stipulated in the agreement between the nominee holders and their clients.
Now, as a matter of additional regulatory scrutiny, the Bank of Russia is introducing a new reporting form for local custodians where they will be required to report on the non-fulfillment of the mandatory disclosure requirements by nominee holders. The new reporting is to become effective as of 1 January 2019. The form of reporting will include information on the name of the nominee holder, the tax ID or registration details, name of the issuer, quantity of securities kept by the nominee holder, details of the disclosure request. The reports will be provided by the Russian custodians to the Bank of Russia on a quarterly basis.
The Bank of Russia has additionally clarified that custodians will not be obliged to report on the non-disclosure for corporate actions purposes, as such disclosure is not mandatory. The reporting will not cover non-disclosure by nominee holders for income purposes either.
Head of Relationship Management and Product Development
Global Securities Services Russia