Collisions of Criminal and Business Legislation Norms in the Context

of the Effectiveness of Combating Crime

Tatiana Alexandrovna Batrova

The All-Russian State University of Justice, the department of civil and business law, Moscow, Russia

Keywords: Collisions, economic crimes, illegal entrepreneurship, state registration, figurehead, beneficiary, nominee

director.

Abstract: The article is devoted to the assessment of collisions between criminal legislation and legislation on

entrepreneurial activity as a determinant of reducing the effectiveness of combating crime in the economic

sphere. The inconsistency of criminal law norms with the provisions of the legislation on entrepreneurial

activity, as well as the formation of contradictory doctrinal ideas, partly generated by the ambiguous criminal

law policy in this area, significantly affects the crime detection due to the existing legal uncertainty in the

assessment of criminality and punishability of acts. The implementation of dialectical, teleological, formal-

legal, systemic-structural research methods have made it possible to formulate several conclusions and

proposals of both conceptual and applicable nature. The first decision should include the need to revise the

criminal law in the process of making changes and additions to the legislation on entrepreneurial activity in

order to avoid collisions between them. It is proposed to correct the hypothesis of Part 1 of Art. 171 of the

Criminal Code of the Russian Federation, adding an indication of the obligatory legal requirement on

registration as a condition for making a formal accusation or, through judicial interpretation, to expand the

interpretation of registration to any form of state recording of persons engaged in entrepreneurial activity,

including notification of it and posting to the accounts as a taxpayer. The expediency of a clearer correlation

mentioned in Art. 173.1 of the Criminal Code of the Russian Federation terminology with legal categories

used in sectoral legislation is determined, as well as the extension of the norm to the practice of using

previously created legal entities with a simultaneous indication of the illegal purposes of such actions.

1 INTRODUCTION

The problems of combating crime in the field of

entrepreneurial activity quite often attract the

attention of the scientific community. It is proved by

several dozen dissertation and monographic studies,

where it can be traced as the implementation of a

systematic approach to solving problems arising here,

which involves the analysis of theoretical issues,

legislative regulation and judicial practice [Talan,

2002; Lopashenko, 1997; Zhilkin, 2019] and

consideration of separate corpus delicti [Borovkov,

2018; Ivanova, 2010; Zatsepin, 2010]. Considerable

attention is paid to this problem in foreign

jurisprudence, where it is usually considered in the

context of the concept of white-collar crime [Green,

2004; Friedrichs, 2007], the essential characteristics

are increasingly eroded under the influence of private

legal regulation. It does not allow determining a fixed

and generally recognized set of necessary and

sufficient conditions that define this category of

crimes [Green, 2004]. As a result, statements about

the weakness of criminal law periodically appear

[Kenneth, 2006], as well as the evolution of ideas

about white-collar crimes is stated [Reurink, 2016].

Evaluating the effectiveness of the application of

the relevant legal norms, researchers inevitably face

the need to refer to the norms of legislation on

entrepreneurial activity, sometimes offering their

own methodological approaches to understanding its

legal essence, linking with it certain areas of

development of criminal legislation, including the

formation of separate structures as formal [Zhilkin,

2019]. At the same time, insufficient attention is paid

to the problems of inconsistency of criminal law

norms with the norms of legislation on

entrepreneurial activity, which can have both

conceptual and legal-technical nature. Although there

are separate publications devoted to the problems of

harmonizing the application of civil and criminal

Batrova, T.

Collisions of Criminal and Business Legislation Norms in the Context of the Effectiveness of Combating Cr ime.

DOI: 10.5220/0010642900003152

In Proceedings of the VII International Scientiﬁc-Practical Conference “Criminal Law and Operative Search Activities: Problems of Legislation, Science and Practice” (CLOSA 2021), pages

357-361

ISBN: 978-989-758-532-6; ISSN: 2184-9854

357

legislation [Sachs, 2001; Goldstein, 1992]. The issue

of assessing conceptual approaches to this problem

looks more complicated. It is no coincidence that it is

noted that the roots of existing problems can be found

in the culture of unrestrained competition and

deregulation of the economy [Rodriguez, 2015].

Accordingly, the purpose of the study is the

collision of criminal legislation and legislation on

entrepreneurial activity in the context of the

effectiveness of combating crime. Its achievement

will be facilitated by the solution of the following

tasks: 1) analysis of the reasons for the emergence of

such conflicts of law; 2) identification of the negative

consequences of their appearance for the

effectiveness of combating crime; 3) determination of

directions for improving legislation.

2 MATERIALS AND METHODS

The achievement of these goals and the solution of

the designated tasks is facilitated by the use of a

complex of general scientific and private scientific

research methods, implemented in relation to such

materials as regulatory legal acts, scientific

publications and judicial practice.

The realization of the dialectical method of

cognition with its global, universal nature made it

possible to consider the problem of collisions of

criminal legislation and legislation on entrepreneurial

activity in an inextricable connection with changing

ideas about the essence of entrepreneurial activity and

the conditions for the legality of its implementation.

The teleological method is particularly important. It

presupposes the study of problematic issues related to

the existence of the aforementioned collisions

through the prism of goal-setting, development

strategies and ensuring the optimal regime of legal

regulation of business relations, which is

characterized by the presence of contradictory trends.

The use of the formal legal method allowed to

correlate and analyze the current norms of criminal

and business law and the existing legal practice. The

emphasis has been placed on the inconsistency of the

used legal concepts, the identification of the essence

of legal phenomena in the context of their criminal

law protection, which made it possible to formulate

proposals for improving legislation outside the

political and legal context. The implementation of the

systemic and structural approach allowed to raise the

issue of the existence of a relationship between

problems in law enforcement practice and conflicts

between criminal legislation and legislation on

entrepreneurial activity.

3 RESULTS AND DISCUSSION

The dynamic development of economic relations and

contradictions in their legal regulation inevitably

affect the effectiveness of their criminal-legal

protection. We have to state the presence of a clear

inconsistency of legislative activity in various spheres

of legal regulation.

The collision between the essential characteristics

of entrepreneurial activity in the Civil Code of the

Russian Federation and the Criminal Code of the

Russian Federation looks very indicative in this

sense. The Criminal Code, characterizing illegal

entrepreneurship, associates its implementation with

the lack of registration, license or accreditation

(Clause 1 of Article 171 of the Criminal Code of the

Russian Federation). And if, in terms of compliance

with the requirements for licensing and accreditation,

a reservation was made on the application of these

criteria only if they are mandatory, then the question

remains open regarding registration. Meanwhile,

even the Federal Law “On Amendments to Articles 2

and 23 of Part One of the Civil Code of the Russian

Federation” dated July 26, 2017 no. 199-FZ, Art. 23

of the Civil Code of the Russian Federation was

supplemented with a provision stating that “in

relation to certain types of entrepreneurial activity,

the law may provide for the conditions for citizens to

carry out such activities without state registration as

an individual entrepreneur.” However, it did not

receive systemic development.

The Tax Code of the Russian Federation contains

an indication of individuals who are not individual

entrepreneurs and who provide services to an

individual for personal, domestic and (or) other

similar needs without involving hired workers, as a

special category of taxpayers exempted from personal

income tax and insurance premiums (Clause 70 of

Article 217 of the Tax Code of the Russian

Federation), without defining the corresponding list

of services (Clause 7.3 of Article 83 of the Tax Code

of the Russian Federation). The Federal Tax Service

of Russia, by its Order no. ММВ-7-14 / 270 @ dated

March 31, 2017, approving the form of notification of

an individual about the implementation (termination)

of activities to provide services to an individual for

personal, household and (or) other similar needs , as

well as the procedure for filling it out, among the

types of activities that do not require registration as

an entrepreneur, included services for the supervision

and care of children, sick persons, persons who have

reached the age of 80 years, as well as other persons

in need of permanent nursing on the conclusion of a

medical organization, tutoring and cleaning of living

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quarters, housekeeping. At the same time, the

constituent entities of the Russian Federation were

given the opportunity to expand this list. In the

Ryazan region, it includes hairdressing services at

home, manicure and pedicure services at home,

tailoring for individual orders at home, photograph

services, car repairs, repair and maintenance of

household and computer equipment at home,

renovation of premises (Law of the Ryazan Region

“On additional types of services for personal,

domestic and (or) other similar needs, the income

from their performance is exempted from taxation”

dated November 3, 2017 no. 77-OZ ), in the Altai

Territory it includes only livestock grazing services,

plowing vegetable gardens on an individual order of

the population, cutting firewood on an individual

order of the population, as well as written and oral

translation (Law of the Amur Region “On types of

services for personal, household and (or) other similar

needs, the income from their performance is

exempted from taxation” dated October 5, 2017 no.

119-OZ ).Thus, the legality of entrepreneurial activity

is made dependent not only on federal, but also on

regional legislation, it leads to a paradoxical situation

in the context of assessing criminality and

punishability of acts.

A more universal approach is proposed by Federal

Law “On conducting an experiment in establishment

of a special tax regime” “Tax on professional

income” dated November 27, 2018 no. 422-FZ

(hereinafter the Law on TPI) which allows the

implementation of activities without state registration

as individual entrepreneurs, except for cases when the

conduct of any type of activity requires mandatory

registration as an individual entrepreneur in

accordance with federal laws (Clause 6 of Article 2 of

the Law). At the same time, the object of taxation is

formulated extremely broadly, and the exceptions are

very insignificant, which makes it possible to extend

this tax regime to very diverse types of activities

(Article 6).

The question of a legal and technical nature also

arises regarding the possibility of a broad

interpretation of the concept of registration in the

hypothesis of a criminal law norm establishing

responsibility for illegal business. If we implement a

broad interpretation, which is not typical for the

criminal law sphere, and bring under the concept of

registration any forms of state recording of persons

engaged in entrepreneurial activities without forming

a legal entity, then the problem can be solved, since

the Tax Code of the Russian Federation provides as a

condition for the legality of the provision of services

to individuals, the direction of the corresponding

notification to the tax authorities, and Art. 5 of the

Law on TPI connects the possibility of applying a

special tax regime with registration as a taxpayer.

Such nuances could be taken into account in the

framework of the judicial interpretation of the

considered norm by the Supreme Court of the Russian

Federation. However, the position of the Plenum of

the Supreme Court of the Russian Federation,

expressed in paragraph 3 of its Resolution “On

judicial practice in cases of illegal entrepreneurship”

dated November 18, 2004 no. 23 has not yet

undergone changes and connects the implementation

of entrepreneurial activities without registration with

those cases when there is no record of the creation of

such a legal entity or the acquisition by a person of

the status of an individual entrepreneur in the Unified

State Register of Legal Entities and Unified State

scope of Art. 171 of the Criminal Code of the Russian

Federation actually includes both categories of

individuals who, in principle, can overcome the

income threshold set for criminal liability in an

amount exceeding two million two hundred and fifty

thousand rubles.

The concept of “figurehead” used in Art. 173.1 of

the Criminal Code of the Russian Federation is also

noteworthy. It unites categories that are different in

meaning. The interpretation of the first of them has a

clearly illegal component, since we are talking about

entering data on specific persons into the Unified

State Register of Legal Entities without their

knowledge or as a result of misleading them. It is

more difficult with persons who are the governing

bodies of the organization who do not have the

purpose of managing it. Firstly, a natural question

arises whether these norms apply only to the stage of

creating an organization or retain their force in the

future, when the person who is the governing body

actually retires. Such a conclusion follows from a

literal interpretation, otherwise, as noted by Z.D.

Rozhavsky, it could lead to criminal prosecution of

persons who, for whatever reason, left the

organization that they created and no longer engage

in business [Rozhavsky, 2017]. But in this case, the

practice of using already created legal entities is

outside the scope of the norm, their existence is

artificially supported to prevent the exclusion from

the Unified State Register of Legal Entities as invalid

in the manner prescribed by Art. 21.1 of the Federal

Law “On State Registration of Legal Entities and

Individual Entrepreneurs” dated August 8, 2001 no.

129-FZ, not to mention competition with Part 1 of

Art. 170.1 of the Criminal Code of the Russian

Federation, which provides for the qualification of

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actions to submit documents containing deliberately

false data to the tax authorities in order to enter in the

Unified State Register of Legal Entities, inaccurate

information about the founders (participants) of a

legal entity and the head of its permanent executive

body.

The considered norm clearly lacks an indication

of the unlawful purpose of committing such actions.

Meanwhile, as it is rightly noted by P.S. Yani, “the

prohibition should have extended to the creation of

such firms that are intended to be used in criminal

activities, when participation in these firms, their

management of persons planning to commit crimes,

is masked by reflecting in the documents submitted

for registration, information about other persons who

are not involved in criminal activity” [Yani, 2014]. In

addition, the question arises about the assessment of

the management system of a legal entity, which

includes the so-called beneficial owners, that is,

individuals who ultimately directly or indirectly

(through third parties) own (have a predominant share

of more than 25% in the capital) by a client – a legal

entity or have the ability to control the actions of the

client. The legislation does not contain a ban on its

use, and Federal Law “On Counteracting Legalization

(Laundering) of Criminally Obtained Incomes and

Financing of Terrorism” dated August 7, 2001 no.

115-FZ only establishes the requirement to disclose

information about such persons (Article 6.1). In

general, as it is noted in the literature, the question of

who and under what conditions should be recognized

as the actual head of an organization with all the

variety of corporate governance models can be

resolved ambiguously [Esakov, 2018].

Finally, it is not entirely clear that the concept of

a “nominee leader” adopted in the field of

entrepreneurial activity is abandoned by the Plenum

of the Supreme Court of the Russian Federation in

Clause 6 of Resolution “On certain issues related to

bringing persons controlling the debtor to

responsibility in bankruptcy” dated December 21,

2017 no.53 defines as a head who is formally a

member of the bodies of a legal entity, but did not

carry out actual management, in particular, who

completely delegated management to another person

on the basis of a power of attorney or who made key

decisions on the instructions or with the explicit

consent of a third a person who did not have the

appropriate formal authority (de facto leader). The

fact that the controversial definition appeared in the

Criminal Code of the Russian Federation earlier does

not change the essence, since the terminology was

formed quite a long time ago, being at one time

borrowed from foreign doctrine [Robilliard, 1995;

Adam, 2016] and legislation.

4 CONCLUSION

The foregoing information allows us to formulate

several conclusions, both conceptual and applicable

nature.

Firstly, in the process of making changes and

additions to the legislation on entrepreneurial activity

it seems necessary to revise the criminal law norms in

order to avoid collisions between them.

Secondly, it is necessary to correct the hypothesis

of Part 1 of Art. 171 of the Criminal Code of the

Russian Federation, adding an indication of the

obligatory legal requirement on registration as a

condition for bringing to criminal liability or by

means of judicial interpretation to expand the

definition of registration to any form of state

recording of persons engaged in entrepreneurial

activity, including notification of it and posting to the

accounts as a taxpayer.

Thirdly, it is advisable to more clearly correlate the

terminology used in Art. 173.1 of the Criminal Code

of the Russian Federation with legal categories

defined in sectoral legislation, to extend the action of

the norm to the practice of using previously created

legal entities, at the same time indicating the illegal

purposes of such actions.

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