Background check Russia 

NEW REQUIREMENTS FOR RUSSIAN BANKS

Bank executives face new disclosure requirements. A new law obliging Russian banks to disclose information about qualification and professional experience of the executives came into effect in mid-November. It concerns the majority of key bank positions (roles), such as:

  • Members of the Board of Directors (Supervisory Board)
  • Sole executive body (CEO, President)
  • Deputies and Members of the Collective Executive Body (Management Board)
  • Chief Accountants and their Deputies
  • Top-managers and Chief Accountants of bank branches

What information shall be disclosed?

In addition to names of executives and their positions, banks shall post information about their education and work experience during the past five years prior to the date of appointment. Bank disclosure now includes following details:

  1. Full name (surname, first name and patronymic) of the CEO or President в«Т if available
  2. Position held and dates of candidacy approval by the Central Bank of Russia; dates of Board Members election
  3. Information about vocational and further education, scientific degrees and academic ranks: i.e. educational institution, year of graduation, qualification, specialization or major
  4. Professional experience during the past 5 years prior to the date of appointment: i.e. employer, position (including Board memberships), dates of appointment (election) and dismissal, job description

Disclosure of information affects only formally occupied posts. Nevertheless, it is important to remember that some enterprises (especially companies controlled by small groups of owners) are frequently managed by informal Executive Bodies. In order to secure personal information of their executives companies use following practices:

  • They establish informal “Board of Directors” comprised of several owners and top-managers, who are involved in the business. Its authority is not defined formally; generally, this executive body is not even reflected in company’s disclosure
  • They report formal posts of executives, which disagree with their actual roles in the company: for example, shareholders or their trusted agents may be referred to in disclosure as Deputy Directors General

Banks reaction

Some banks are already planning internal changes: e.g. they start naming employees with more presentable biography for nominal directorship or declaring some Board members and Deputies as advisers and consultants. In practice, this may lead to even greater difference between actual and declared frameworks of management structures.
However, Russian authorities offer bank clients and other interested individuals an additional due-diligence instrument. When signing large contracts with banks (e.g. putting funds under management or changing a processing center) potential clients can now verify abovementioned information individually or with the help of external providers.