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On March 2, 2019, the Government of the Russian Federation submitted Bill No. 657608-7 ‘On Amending the Criminal Code of the Russian Federation and the Code of Criminal Procedure of the Russian Federation with regard to the responsibility for the unauthorized extraction and illegal circulation of amber, jade or other semi-precious stones’ to the State Duma of the RF (https://sozd.duma.gov.ru/bill/657608-7).

On July 16, 2019, this bill was passed in its first reading and is now awaiting its second reading. We have already talked about this bill introducing the criminal liability for the extraction and circulation of semiprecious stones.

However, on October 10, 2019, another bill regulating the same criminal law standards as bill No. 657608-7, which had already passed its first reading in the State Duma of the RF, was posted on the website of the Federal Portal of Normative Legal Acts for public discussion. The new bill was initiated by the Ministry of Finance of Russia and is titled ‘On the Amendments to the Criminal Code of the Russian Federation and the Code of Criminal Procedure of the Russian Federation regarding the improvement of the criminal liability in the production, use and circulation of precious metals and precious stones’

(https://regulation.gov.ru/projects#npa=95725).

The adoption of both bills at the same time is not possible, because they involve different amendments to the same articles of the Criminal Code of the Russian Federation.

Let’s consider and compare the content (or, as the lawyers say, the disposition) of the articles of these two bills, in terms of their impact on the Russian market for precious and semiprecious stones only, leaving aside those parts of the new laws that relate to precious metals.

At the stage of mining ...

The change in the criminal legislation in the field of precious and semi-precious stones mining is planned to be made by introducing new legal standards into two articles of the Criminal Code of the Russian Federation at once: Article 255 of the Criminal Code of the RF will be used to punish for illegal or unauthorized mining of precious or semi-precious stones. And article 192 of the Criminal Code of the RF - for evading the obligatory sale of the precious stones extracted from subsoil, recycled precious stones, and also the precious stones picked up from the ground and found to the state.

The meaning of the present day legal standards of article 192 becomes more clear if we keep in mind that the current version of the article was introduced instead of the punishment for the illegal mining of precious metals and stones, which was provided for by this article at that time, and this was done at the time when it was supposed to allow free-will bringing the precious metals and stones ... Free-will bringing was never allowed, but they managed to change the disposition of Article 192 of the Criminal Code of the RF. Since such free-will bringing of precious stones should not be expected now, it does not make sense to consider the alleged new versions of this article - the law does not require to sell precious stones to the state, with the exception of unique ones.

For a better understanding of a rulemaking trend, we will compare - article by article - the operative regulations with those of the bill already adopted in its first reading (we will call it the bill in the State Duma) and also with the regulations of the bill, the public discussion of which is just beginning (we will call it the bill of the Ministry of Finance).

Table 1. Criminal Code of the Russian Federation, Article 255. Violation of the rules for the subsoil protection and utilization

analyt_21102019_eng_1.png

The comparison of the norms in force, the bill in the State Duma and the bill of the Ministry of Finance shows the following.

1. The fact that in the current criminal law there is no criminal punishment for the illegal mining of precious stones is a legal nonsense due to haste while updating the Criminal Code of the RF in the period when there were intentions to introduce free-will brining. The lawyers who are far from understanding the specific features of the industry try to explain this nonsense by the fact that the production is always associated with storage, and for the illegal storage there is an article in the Criminal Code of the RF, namely, article 191, that will be discussed below. But this is not the case, what article 191 involves is not the storage of precious metals and precious stones mined illegally, but the illegal storage in any case, including the stones mined legally, but illegally acquired. In other words, it is necessary to introduce an article in the Criminal Code of the RF for illegal mining of precious metals and stones, which is being done by the bill of the Ministry of Finance.

The several-fold fines stipulated by the bill of the Ministry of Finance also make sense. Another thing is the poor differentiation of the punishment for illegally operating single artisans and miners operating in a group of people. The punishment looks excessively tough as for the single artisans. It seems that the several-fold fines for individuals should be less (2-3-fold fines would be quite enough), and the imprisonment for illegal mining by single artisans should not be applied at all. Our state is humane, and we understand that people can start mining precious metals and stones alone not for the sake of becoming rich, but because of their hopeless life - having no legal way to earn their living in some remote regions of Russia.

And for the ‘acts committed by an organized group’, against the background of fines as much as 15 times the value of the stones and/or metals obtained illegally, the imprisonment for a term of up to 7 years is clearly too much. Even in a bill submitted to the State Duma, the term of the imprisonment does not exceed 4 years. We don’t have the Gulags, why do we need such people ‘serving time’, let them better pay their money, and keep on working further observing the law ...

Moreover, in the Explanatory Note to the bill of the Ministry of Finance, its authors indicate that the Plenum of the Supreme Court of the RF No. 33 dated 03.10.2017 recommended to discuss the possibility of imposing a milder penalty - a conditional sentence - on the persons convicted of crimes in the field of entrepreneurial or other economic activity than the one provided for this crime. So why, in general, in article 255 of the Criminal Code of the RF, the punishment of the imprisonment is preserved if the severity of the punishment is directly already laid down (several-fold) depending on the factor of the fine increase relative to the damage caused by the crime to the state economy? The penalty, the several-fold one, for a crime in the economic sphere would make sense and seem sufficient for all the cases of Article 255 to effectively prevent crimes.

2. The fact that the bill of the Ministry of Finance does not consider introducing criminal penalties for the unauthorized extraction of amber, jade or other semiprecious stones is, without a doubt, the triumph of common sense. The idea of ​​introducing a criminal liability for hard- to-understand ‘unauthorized’ mining, as well as for circulation (transactions, storage, transportation, sending forward in any condition) of the amber, jade or other semiprecious stones - mined ‘without authorization’ - proposed in the bill in the State Duma is extremely harmful to the market for these stones.

According to the common sense, the introduction of the criminal liability for ‘unauthorized’ mining of semiprecious stones seems absurd - it is irrational for the state budget and is not in line with the world practice. Why to protect by a separate article of the Criminal Code if the contribution of the turnover of these stones to the turnover of the entire sphere of the PMPS of Russia is quite insignificant - the turnover of all semiprecious stones in Russia from 2016 to 2019 amounted to $3.1 mn to $7 mn annually, not exceeding a 0.06% share in the total turnover of the PMPS sector. At the same time, according to the Ministry of Internal Affairs of Russia (from the Explanatory Note to the bill!), the illegal income of individuals who mine amber can amount to ₽67,000 a month, and of those producing jade - up to $75,000 a month. What threat to Russia's economic security can we talk about in this case?

3. It is not clear why the bill of the Ministry of Finance sets the value of ‘large-scale’ mining equal to 1 million rubles under article 255 of the Criminal Code of the RF, while for all other articles of the Criminal Code of the RF today, the amount of 2.25 million rubles is considered to be ‘large-scale’ mining. It seems that the same amount should be regarded as ‘large-scale’ mining for article 255 of the Criminal Code of the RF.

At the stage of circulation ...

Table 2. The Criminal Code of the RF, Article 191. Illicit circulation of precious metals, natural precious stones or pearls

analyt_21102019_2_eng.png

1. We have already spoken about transactions related to the amber, jade or other semiprecious stones mined without authorization. Naturally, everything relating to article 255 of the Criminal Code of the RF in terms of these objects also applies to article 191 of the Criminal Code of the RF. How many people can suffer if such a version of the article is adopted is an open question, and it depends on the possible practice of the law enforcement. Theoretically - millions of Russians can.

Over the entire history of the USSR and Russia, the so-called semiprecious stones have been circulating absolutely freely. Probably, every Russian family has some kind of a ‘semiprecious’ pebble, in one form or another. Is it worth talking about the collectors of minerals, the number of which in Russia, according to expert estimates, are not less than one hundred thousand ... So, with the introduction of Article 192 into force in the wording of the bill that is in the State Duma, all these people are criminals, because if they were searched or if they would want to sell their ‘semiprecious’ stones, nobody could prove to the investigators that they we mined ‘with authorization’. Firstly, over decades, the vast majority of such stones have been purchased at the countless mineralogical exhibitions, stalls selling semiprecious stones, and etc., where no one ever gave any accompanying documents for the stones. And, secondly, even if anyone had such documents, it is unlikely that they kept them - who and why needed to keep receipts for stones, the circulation of which never required confirmation of the their legal acquisition?

However, if the initiators introduced this legal standard in the bill submitted to the State Duma just for this purpose - to expand the base of Russians for potential charges of violating the criminal code to 100% of the population (it may come in handy) - then in this case, that makes sense.

Thank God, the Ministry of Finance of Russia understands everything of the above, and in its bill, they do not touch on the topic of the semiprecious stones.

2. Compared with the current version of Article 191 of the Criminal Code of the RF, the Ministry of Finance of the Russia proposes to remove the concept of the ‘natural gemstones or pearls’ from the disposition of the article, replacing it with ‘gemstones’, which makes sense, because it eliminates the redundancy of the text - in 41-FЗ ‘On precious metals and precious stones’, it is written that precious stones are natural ... (the list is given). However, there are fears that the removal of the word ‘natural’ from Article 191 of the Criminal Code of the RF will be perceived by the law enforcement authorities as a sign that the circulation of expensive synthetic analogues of the stones listed in the law also falls under this article. For example, the circulation of the synthetic diamonds. Such a possible interpretation of the change in the norm of an article of the Criminal Code of the RF seems unacceptable.

The bottom line is that the bill proposed by the Ministry of Finance is much better than the bill awaiting its second reading in the State Duma. Although it is also desirable to improve the Finance Ministry’s bill, as it has been said. It remains to wait and see how events will develop. Will the previous bill be withdrawn from the State Duma? Will they introduce a new one, the one proposed by the Ministry of Finance of Russia?

Vladimir Zboykov, Rough&Polished