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The Supreme Court has published the review of practice for combating illegal financial transactions. The point is that it is not uncommon that people apply to the court, having the actual intent not to resolve any civil disagreements but to use them as a cover for laundering of the proceeds from crime. Usually, the ultimate purpose in such cases is to get money out. That is, this is about a direct violation of Federal Law No.115-FZ “On Combating the Legitimization (Laundering) of the Proceeds from Crime and the Terrorism Financing”. When examining an administrative or arbitration case, the court may de facto be involved in the commission of a criminal offence.<...>

The Supreme Court clarifies that a court shall be entitled to, on its own initiative, declare a transaction void, refuse to approve a settlement agreement, refuse to accept the acknowledgement of claim by defendant, refrain from issuing a court order, etc.

In practice, the courts, when coming across the signs of misbehaviour of trial participants, whose actions give evidence of the probable violation of tax, customs or foreign exchange legislation, must involve other government agencies in the case.

The involvement of government agencies in the case often results in the parties’ losing interest in adjudication of the case by court. This results in leaving a claim without consideration due to the plaintiff’s failure to appear before court twice. That is, the practice is not only lawful but it is also reasonable, – Nikitin clarifies.

The government agencies, i.e. tax office, Rosfinmonitoring and prosecutor’s office themselves, may file an application with court for the review of a judgment or court order in view of newly discovered facts, if such facts are indicative of legitimization of income but were unknown at the time of consideration of a dispute.

The persons not involved in the case shall be also entitled to file such application. The Supreme Court has clarified that the facts indicating a violation in the field of combating of legitimization of income may be recognized by court as newly discovered facts, even if they are not a subject matter of judicial proceedings.

When considering the dispute arisen from civil-law relations, the court may refuse to approve a settlement agreement, refuse to accept the acknowledgement of claim by defendant and settlement between the parties, if there is a reason to believe that the trial participants do not actually conflict with each other but intend to make an illegal financial transaction.

It is a reasonable measure to refuse to accept the acknowledgement of claim by defendant, if there is a suspicion that there is no dispute between the parties. The review contains a case study, which clearly demonstrates this problematics. The defendant has acknowledged the debt of RUB 100 million under a supply contract without raising any objections, which is unusual taking into account the amount in dispute. The court, having doubts as to the validity of claim, has examined the evidence and found out that primary accounting documents have been executed identically both by plaintiff and defendant. The parties have failed to prove the actual performance of the contract; moreover, the plaintiff has failed to file accounts with regard to this transaction with tax office.

Such “strategy” is commonly used by unfair participants when considering bankruptcy cases. Concluding settlement agreements or acknowledging claims in disputes with friendly creditors, such participants seek the judicial acts’ coming into legal force as soon as possible, while causing a delay in considering the lawsuits and claims of other creditors.

The court may also reject an application for issuing a court order, if such application could be “related to the intention to make” the illegal financial transactions.

The point is that writ proceedings are some sort of “simplified” judicial proceedings, which are based on indisputability of stated claims, their confirmation by written evidence and on the principle of consideration of application by a single judge. The expeditious consideration of applications and the absence of court hearing are typical for such judicial proceedings. The unfair participants of the market often use such specifics in order to regularize the illegal financial transactions.

When it comes to a court order, which is considered without the presence of plaintiff and defendant, the court may prevent any satisfaction of doubtful claims merely by rejecting an application for issuing a court order. This does not deprive the plaintiff of its right to lodge a claim according to action proceedings. Here is one of the examples: several magistrate courts have established that the same person applied to them seeking a court order for recovery of the accrued but unpaid salary of RUB 400 thousand. Each of the applications and copies of employment contracts attached thereto specified the person’s place of residence, which falls within the territorial jurisdiction of the relevant magistrate judge, although the employer was from another region, – Kirill Nikitin explained.

The court’s proactive attitude may also become obvious from the fact that it challenges the validity of claims, which defendant is ready to acknowledge. For example, one of the cases referred to a suspicion of fraudulent transaction, on which the plaintiff based its claims for the recovery of RUB 500 million under a contract for purchase and sale of a land plot of the cadastral value of RUB 21 thousand. The land plot was classified as agricultural lands that shall be used for “agricultural production”, but the defendant was not engaged in such activity. In the appellate instance, the parties intended to conclude a settlement agreement but the court has refused to approve it.

The court shall be entitled to refuse the enforcement of foreign judgments, including arbitral awards, as well as issuance of a writ of execution for enforcement of decisions of ad hoc arbitration panels, if it considers that the purpose of applying to court was to “create the appearance of a civil-law dispute and obtain the formal grounds” for money transfer to foreign jurisdictions.

In one of the considered cases, Rosfinmonitoring filed a cassation complaint against the final and binding court ruling, whereby a judgement of the district court of the Kyrgyz Republic has been recognized and enforced within the Russian Federation.  The applicant claimed thereunder the recovery from the Russian company of the debt of RUB 235 million under a supply contract. Finmonitoring has managed to prove that the Russian company-debtor shows evidence for a sham company with nominal director. The ruling has been set aside. In another case, the court has refused to issue a writ of execution in a dispute between two companies, which were established shortly before the conclusion of a supply contract, had minimum charter capital amounts and were not located at place of registration. The court has concluded that the parties merely created the appearance of a civil-law dispute in order to create a false debt and that they applied to ad hoc arbitration panel in order to confirm such invented debt. 

The Supreme Court’s review also contains the practice of using bills of exchange and promissory notes, explanations of the ways to bypass the provisions of legislation concerning illegal financial transactions by the parties to business transactions.

See the full text of the article at: https://volgasib.ru/virtual/ekspertiza/sudi-budut-aktivno-vyyavlyat-otmyvanie-dohodov-v-grazhdanskih-delah/