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| - == The Federal Service for Economic and Tax Crimes of the Ministry of Internal Affairs of the Russian Federation == The history of the single-minded struggle against tax crimes in modern Russia amounts to something over eleven years. A specialized law enforcement agency — the Chief Tax Investigations Administration—was created at the outset for this purpose by the Edict of the President of the Russian Federation of 18 March 1992, № 262 «On the Creation of the Chief Tax Investigations Administration», known by its Russian acronym as the GUNR. The tax investigations subdivisions were called upon to effectuate measures directed to wards enhancing the effectiveness of the activity of tax agencies with regard to the timely receipt in the budget of taxes and other obligatory payments. Subsequently, on the basis of the Law of the Russian Federation of 24 June 1993 «On Federal Tax Police Agencies», the tax investigations agencies were reorganized into the federal tax police agencies. The legal successor of the Chief Tax Investigations Administration was determined to be the Tax Police Department of the Russian Federation (DNP Russia), on the base of which in turn the Federal Tax Police Service (FSNP) of the Russian Federation was formed in 1996. In accordance with the tax law, the tax police agencies were defined as an integral part of the forces for ensuring the economic security of the State, having as a principal task the eliciting, prevention, and suppression of tax crimes and violations of law. In addition, tasks with regard to ensuring the security of the activity of tax agencies and defense of their personnel against unlawful infringements when performing employment duties and the prevention, eliciting, and suppression of corruption in tax agencies, were placed on the tax police agencies. In order to fulfill the tasks placed on them, the tax police agencies were endowed with a number of specific powers. In particular, the personnel of tax police agencies when performing employment duties, in addition to the right to effectuate operational-search measures, conduct an inquiry and investigations with a view to eliciting, preventing, and suppressing facts of the concealment of revenues from taxation and evasion of the payment of taxes, the right also was granted to: take advantage, when performing employment duties, of the rights granted by legislation to officials of tax agencies; effectuate when there is sufficient data verifications of taxpayers; impose arrest on the property of taxpayers and effectuate the recovery of arrears; receive information comprising a banking or tax secret; suspend operations with regard to the accounts of juridical persons in credit organizations, and others. During the said period, the joint efforts of tax police agencies and tax agencies enabled compliance by taxpayers to be materially increased, and the state of affairs in the sphere of taxation to be changed for the better. To a significant extent the results of operational-search and criminal procedure activity of tax police agencies facilitated this. Thus, whereas in 1993 according to data of the Tax Police Department of the Russian Federation the tax police agencies instituted 617 criminal cases with regard to facts of violations of law connected with the concealment or understatement of objects of taxation on a large-scale or especially large-scale, in the year 2002 the inquiry official and investigators of the Federal Tax Police Service of the Russian Federation investigated about 24,000 criminal cases concerning the evasion of payment of taxes. Within the framework of reforming the law enforcement system of Russia and the realization of State policy in the domain of eliciting, preventing, and suppressing tax crimes and violations of law in accordance with points 2 and 3 of the Edict of the President of the Russian Federation of 11 March 2003, № 306, «Questions of the Improvement of State Administration in the Russian Federation» , the Federal Tax Police Service of the Russian Federation from 1 July 2003 was abolished, and in place of this agency of executive power within the structure of the central apparatus of the Ministry of Internal Affairs of the Russian Federation was formed the Federal Service for Economic and Tax Crimes (FSENP MVD Russia). This subdivision, being an integral part of the forces of the criminal police, is directly subordinate to the Minister of Internal Affairs of the Russian Federation and his headed by a deputy minister — the head of the Federal Service for Economic and Tax Crimes of the Russian Ministry of Internal Affairs. The Deputy Minister— Head of the Federal Service for Economic and Tax Crimes of the Ministry of Internal Affairs is accountable for the state and results of the activity of subdivisions for the struggle against economic crimes and subdivisions for tax crimes. The functions with regard to coordinating the activity of the Federal Service for Economic and Tax Crimes are effectuated by the First Deputy Minister of Internal Affairs of the Russian Federation— the head of the Criminal Police Service. Thus, the transfer to the Ministry of Internal Affairs of the function of the abolished Federal Tax Police Service with regard to eliciting, preventing, and suppressing tax crimes and violations of law was legally formalized. However, until the completion of all measures relating to the abolition of the tax police agencies and transfer of the said functions to the internal affairs agencies, the executives and officials of the Federal Tax Police Service of the Russian Federation and its territorial agencies were obliged to continue the performance of the duties placed on them to the full extent. In execution of the aforesaid provisions an Order of the Ministry of Internal Affairs of Russia was issued on 5 June 2003, № 385, «On Measures With Regard to the Realization of the Edict of the President of the Russian Federation of 11 March 2003, № 306», in accordance with which the eliciting, prevention, suppression, and investigation of tax crimes and violations of law was deemed to be one of the priority orientations of activity, and internal affairs agencies were orientated towards the establishment of interaction with tax agencies. The Statute on the Federal Service for Economic and Tax Crimes of the Ministry of Internal Affairs of the Russian Federation was confirmed by this departmental normative legal act. Among the basic functions of the Federal Service for Economic and Tax Crimes (hereinafter: Federal Service), besides organizing the eliciting, prevention, suppression, and unmasking of crimes in the sphere of the economy with regard to which preliminary investigation proceedings are obligatory and of tax crimes, as well as crimes against the interests of State power committed in federal agencies of State power there also have been relegated: the integrated analysis of information concerning the state of criminality in the sphere of the economy and taxation; the preparation of proposals with regard to basic orientations of State policy with regard to the struggle against crimes in the sphere of the economy and taxation; the organization and conducting of prophylactic and operational-search measures with regard to defending all forms of ownership against criminal infringements for the purpose of ensuring favorable conditions for the development of entrepreneur-ship and investment activity. The Federal Service is, with regard to status, a structural subdivision of the central apparatus of the Ministry of Internal Affairs of the Russian Federation which is called upon to ensure the powers of the Ministry with regard to the struggle against crimes in the sphere of the economy and tax crimes and violations of law directly, as well as through the chief administrations of the Ministry of Internal Affairs of Russia with regard to federal districts, ministries of internal affairs, chief administrations, and administrations of internal affairs of subjects of the Russian Federation. In turn, the structure of the Federal Service confirmed by the Ministry of Internal Affairs of the Russian Federation incorporates the Chief Administration for the Struggle Against Economic Crimes transformed in this connection which previously was within the structure of the Criminal Police Service of the Ministry of Internal Affairs and the newly created Chief Administration for Tax Crimes. Heads who are deputy heads of the Federal Service lead the chief administrations; they are appointed to and relieved from office in the established procedure. At the level of federal districts the Federal Service is represented by an operational-search bureau for economic and tax crimes of the respective chief administrations of the Ministry of Internal Affairs. In accordance with point 2 of the Edict of the President of the Russian Federation of 21 May 2003, №. 547 «On Making Changes in and Additions to Certain Acts of the President of the Russian Federation for Questions of the Activity of the Ministry of Internal Affairs of the Russian Federation», they were given the task of eliciting, preventing, and suppressing economic and tax crimes of an inter-regional character. At the regional level the struggle against crimes in the sphere of the economy and tax crimes is effectuated respectively by administrations (or sections, divisions, groups) for the struggle against economic crimes and by administrations for tax crimes, which are subordinate to the Ministry of Internal Affairs, Chief Administration for Internal Affairs, and administrations of internal affairs of subjects of the Russian Federation. The eliciting, prevention, and suppression of economic and tax crimes must be effectuated within the framework of the competence, tasks, and functions placed on the criminal police. This is explained by the fact that the basic tasks of the criminal police were and are: the eliciting, prevention, suppression, and unmasking of crimes with regard to cases concerning which preliminary investigation proceedings are obligatory, and also the organization and effectuation of the search for persons who have concealed themselves from agencies of inquiry, investigation, and the court and evading the execution of a criminal punishment. Proceeding from this, by Decree of the Government of the Russian Federation of 24 June 2003, № 362, changes have been made in the Decree of the Government of the Russian Federation of 7 December 2003, № 925, «On Subdivisions of the Criminal Police» in accordance with which subdivisions of the Federal Service for tax crimes also, just as subdivisions for the struggle against economic crimes, have been introduced in the criminal police forces. The composition of the criminal police of subjects of the Russian Federation has been changed similarly. However, at the level of internal affairs agencies of districts, cities, districts in cities, and other municipal formations the Federal Service will be represented only by subdivisions for the struggle against economic crimes. Within the criminal police on railway, water, and air transport and the criminal police in closed administrative-territorial formations and at especially important regime objects, unlike the subdivisions for the struggle against economic crimes, there will be no subdivisions for tax crimes. It should be taken into account that together with the Federal Service, other subdivisions of the Ministry of Internal Affairs of Russia are active in the cause of struggle against tax crimes and violations of law. This is explained by the fact that in accordance with Article 7 of the Law of the Russian Federation of 18 April 1991 «On the Police», as amended, the police system of the Russian Federation includes, besides the criminal police, also public security police. The principal tasks of the last are: ensuring the security of the person, public security; protection of ownership; public order, the eliciting, prevention, and suppression of crimes and administrative violations; unmasking crimes with regard to cases concerning which preliminary investigation proceedings are not obligatory, and the search for individual categories of persons. The public security police are called upon to render assistance to the criminal police in the performance of the duties placed on them. The Public Security Service of the Ministry of Internal Affairs of Russia and its subdivisions, in particular, effectuate proceedings with regard to cases concerning administrative violations in the do main of taxes relegated to the jurisdiction of internal affairs agencies, among them those which previously were considered to be tax police agencies. Cases with regard to violations provided for by Article 14.5 (Sale of goods, fulfillment of work, or rendering of services in absence of established information or without use of control-cashier machines); 15.1 (Violation of procedure for work with cash and procedure for conducting cashier operations); 15.2 (Failure to fulfill duties with regard to control over compliance with rules for cashier operations) of the Code of the Russian Federation on Administrative Violations are relegated to such in particular. In addition, to the competence of the public security police have been relegated to conducting of an inquiry with regard to cases concerning crimes connected with a violation of legislation on taxes and charges; for example, provided for by Articles 171-1 (Production, acquisition, keeping, carriage or sale of unmarked goods and products) and Article 327-1 (Manufacture and sale of counterfeit excise charge stamps, special stamps, or marks of conformity or the use thereof) of the Criminal Code of the Russian Federation. The preliminary investigation with regard to cases concerning tax crimes provided for by Articles 198 (Evasion by natural person of payment of tax or insurance contribution to State extra-budgetary funds) and Article 199 (Evasion of payment of taxes or insurance contributions to State extra-budgetary funds by organization) of the Criminal Code of the Russian Federation is performed by preliminary investigation agencies of the system of the Ministry of Internal Affairs of Russia. In accordance with point 4 of the Statute on Preliminary Investigation Agencies in the System of the Ministry of Internal Affairs of the Russian Federation, confirmed by Edict of the President of the Russian Federation of 23 November 1998, № 1422 «On Measures With Regard to Improvement of the Organization of Preliminary Investigation in the System of the Ministry of Internal Affairs of the Russian Federation» among the preliminary investigation agencies are: the Investigative Committee attached to the Ministry of Internal Affairs of the Russian Federation; investigative administrations of the Investigative Committee for Federal Districts, chief investigative administrations (or administrations, sections) attached to internal affairs agencies of subjects of the Russian Federation, investigative administrations (or sections, divisions, groups) attached to internal affairs agencies in districts, cities, national areas, districts in cities, and also attached to internal affairs agencies in closed administrative-territorial formations and at especially important and regime objects, and investigative administrations (or sections, divisions, and groups) attached to internal affairs agencies on railway, air, and water transport. In the process of the realization of the functions entrusted to the Federal Service, interaction is effectuated with federal agencies of State power, empowered representatives of the President of the Russian Federation in federal districts, agencies of State power of subjects of the Russian Federation, agencies of local self-government, social associations, the mass media, international organizations, and law enforcement agencies of foreign States. The community of functions and tasks determine the need for interaction of the Federal Service with subdivisions of the Ministry of the Russian Federation for Taxes and Charges (MNS Russia). In this case the exchange of information comprising a tax secret and materials with regard to facts of a violation of legislation on taxes and charges is contemplated, as well as conducting joint verifications of taxpayers. Legislation in force also provided for other forms of interaction of internal affairs agencies with tax agencies for the purpose of ensuring the timely and complete receipt of taxes and charges to budgets of all levels, and also eliciting and suppressing violations of tax legislation. Thus, in accordance with the Edict of the President of the Russian Federation of 14 December 1996, № 1680 «On the Participation of Internal Affairs Agencies of the Russian Federation in Work With Regard to Ensuring Receipts of Taxes and Other Obligatory Payments to Budgets», internal affairs agencies by agreement with agencies of the Ministry for Taxes and Charges may participate in ensuring the personal security of personnel of tax agencies when conducting control verifications, and also in the protection of objects of tax agencies on the basis of contracts. Personnel of the Federal Service must effectuate their activity by being guided by the principal of personal responsibility of each for the fulfillment of his duties and the fulfillment of individual commissions, and also the principles of legality, respect for the rights and freedoms of man and citizen. Operational-search activity requires compliance with the conditions of secrecy and the combination of open and not-open methods and means. According to Article 1 of the Federal Law of 12 August 1995, № 144-ФЗ, «On Operational-Search Activity», operational-search activity is a type of activity to be effectuated only and not openly by operational subdivisions of empowered State agencies within the limits of their powers by means of conducting operational-search measures for the purposes of the defense of life, health, rights and freedoms of man and citizen, ownership and ensuring the security of society and the State against criminal infringements. Within the limits of its competence, the Federal Service has the right when effectuating operational-search activity to conduct such operational-search measures as interrogation, making enquiries, collecting samples for comparative study, test purchase, investigation of articles and documents, observation, identity parades, search of premises, buildings, installations, and sectors of a locality and means of transport, control over negotiations, removal of information from technical communications channels, operational intrusion, controlled delivery, and operational experiment. The documenting of economic and tax crimes is effectuated by means of conducting verifications, inventories, and internal audits. In accordance with Article 11(25) of the Law of the Russian Federation of 18 April 1991 «On the Police», the police have been granted the right when there is data concerning a violation of legislation entailing criminal or administrative responsibility regulating financial, economic, entrepreneurial, and trade activity to demand the obligatory conducting of verifications, inventorying, and internal audits of the production and financial-economic activity of organizations, and also to conduct them. Such verifications and internal audits also may be conducted by mean of interaction with control-internal audit agencies and treasury agencies within the structure of the Ministry of Finances of the Russian Federation. Thus, in accordance with the Statute on the Procedure for the Interaction of Control-Internal Audit Agencies of the Ministry of Finances of the Russian Federation with the General Procuracy of the Russian Federation, Ministry of Internal Affairs of the Russian Federation, and Federal Security Service of the Russian Federation, When Designating and Conducting Internal Audits (or Verifications), confirmed by Order of the Ministry of Finances of the Russian Federation, Ministry of Internal Affairs of the Russian Federation, and Federal Security Service of the Russian Federation of 7 December 1999, №. 89H/1033/717 on the basis of recourse by internal affairs agencies when conducting control-internal audit work the following types of control measures are effectuated: internal audit, verification, preliminary study of documents. The said internal audits and verifications of organizations before the initiation of criminal cases is conducted according to recourses signed by the executives of chief administrations of the central apparatus of the Ministry of Internal Affairs of Russia or by persons replacing them and by the executives of internal affairs agencies in subjects of the Russian Federation. In addition, in accordance with Article 1 of the Federal Law of 30 June 2003, №86-ФЗ «On Making Changes in and Additions to Certain Legislative Acts of the Russian Federation, Deeming to Have Lost Force Individual Legislative Acts of the Russian Federation, Granting of Individual Guarantees to Personnel of Internal Affairs Agencies, Agencies for Control Over the Turnover of Narcotic Means and Psychotropic Substances and Federal Tax Police Agencies Being Abolished in Connection with the Effectuation of Measures With Regard to Improvement of State Administration», changes and additions have been made in Article 11, paragraph one, of the Law of the Russian Federation «On the Police» in accordance with which internal affairs agencies have been granted the right to: participate in tax verifications at the request of tax agencies; in accordance with legislation of the Russian Federation receive information comprising a State secret; when there is sufficient information indicating the indicia of a crime connected with a violation of legislation of the Russian Federation on taxes and charges, conduct verifications of organizations and natural persons in accordance with legislation of the Russian Federation. These powers also constitute the legal foundation of the activity of the Federal Service along the line of struggle against tax crimes and violations of law. In accordance with these, internal affairs agencies actually have become subjects of tax legal relations and received the right to effectuate verifications of taxpayers either jointly with tax agencies or autonomously. On the basis of materials of such verifications, internal affairs agencies should adopt respective procedural decisions. In the event of the discovery of tax violations containing the indicia of the constituent elements of a crime, a decision is adopted concerning the initiation of a criminal case, and in the absence of such—a refusal to initiate a criminal case. However, when eliciting circumstances requiring the commission of actions relegated by the Tax Code of the Russian Federation to the powers of tax agencies; for example, in the event of the discovery of a tax violation not containing the indicia of the constituent element of a crime, internal affairs agencies are obliged within a ten-day period from the day of eliciting them to send the materials to the respective tax agency for the adoption of a decision with regard to them. The right of internal affairs agencies to receive information comprising a tax secret corresponds to the provisions of Article 102 of the Tax Code of the Russian Federation (as amended by Federal Law of 30 June 2003, № 86-ФЗ), according to which officials have access to such information in accordance with a List determined by the Ministry of Internal Affairs of Russia. In addition, according to the changed version of Article 26 of the Law on Banks and Banking Activity (as amended by Federal Law of 30 June 2003, № 86-ФЗ), references with regard to operations and accounts of juridical persons and citizens effectuating entrepreneurial activity without the formation of a juridical person are issued to internal affairs agencies when they are effectuating functions with regard to the eliciting, prevention, and suppression of tax crimes before the initiation of a criminal case by credit organizations in accordance with legislation of the Russian Federation.
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