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New requirements for foreign IT companies’ activities in Russia

  • Russia

    08-07-2021

    On July 1, 2021, the new law on additional requirements for IT businesses came into legal force. Foreign IT companies whose activities are aimed at users in Russia should be represented in the territory of the Russian Federation and perform several duties to engage with Russian state bodies, citizens and other organizations.

    These requirements are established by Federal Law No. 236-FZ dated 01.07.2021 “On the Activities of Foreign Residents in the Information and Telecommunications Network “the Internet” on the Territory of the Russian Federation” (hereinafter, the “Law”) and apply to foreign residents who own websites or SaaS services which serve more than 500,000 Russian users daily if:

    1. information in Russian or other state languages established in Russia are distributed on a digital service
    2. advertising on a digital service is aimed at consumers located in the territory of Russia
    3. a foreign resident processes Russian users’ data
    4. a foreign resident receives funds from Russian consumers

    Thus, the duties established by the Law will apply to foreign owners of popular news websites, online stores, media platforms, social networks, search engines, etc.

    Regardless of whether the above criteria are met, the requirements of the Law also apply to:

    1. hosting providers whose computing power is used to host content that is available to Russian users
    2. advertising services used to distribute advertisements aimed at Russian users
    3. owners of social networks, messengers, forums, and other services providing message exchange between Russian users (organizers of information distribution on the Internet)

    The list of hosting providers, advertising services and organizers of information distribution on the Internet which are subject to the requirements of the Law will be determined by Roskomnadzor (the Russian IT supervision authority).

    The Law sets forth the following obligations for such foreign IT companies:

    1. to establish a branch office, representative office or register a legal entity in the territory of the Russian Federation (starting from January 1, 2022)
    2. to place a digital form for appeals from Russian citizens and organizations on their digital service (the procedure will be determined by Roskomnadzor)
    3. to register a personal account for interaction with state bodies of the Russian Federation on Roskomnadzor’s website (the procedure will be determined by the Russian Government)
    4. Once a personal account is created, information is to be sent to Roskomnadzor for inclusion in a special register of foreign IT companies. It is important to note that Roskomnadzor can also add a foreign company to the register at its own discretion if the company meets certain criteria
    5. to provide advertising information

    Representation of a foreign organization is required for receiving and considering appeals from Russian individuals, complying with court rulings or orders of state bodies on the territory of the Russian Federation as well as for representing the interests of said foreign organization in Russian courts and taking measures to restrict access to information or delete it if its distribution breaches Russian law.

    The following liabilities are imposed for the violation of the abovementioned obligations:

    1. informing the service’s users about any violation of Russian legislation by the service’s owners
    2. prohibition on the distribution of advertising of a foreign resident’s Internet service, advertising of the foreign company or its service
    3. excluding an Internet service from search results
    4. prohibition on the collection and cross-border transfer of data
    5. restriction of money transfers made to a foreign IT company (credit institutions are involved in the enforcement of this restriction)
    6. partial or whole restriction of access to a foreign resident’s Internet service

    Moreover, representatives of a foreign company must promptly respond to Roskomnadzor’s orders to delete information distributed unlawfully. Hosting providers must provide Roskomnadzor with the information about the owner of the information service.

    In case of additional questions, our experienced lawyers will be glad to advise on all matters relating to TMT companies at all stages of their development and in all aspects of their business, including the establishment of branches, representative offices and the registration of legal entities.

    We deal with e-commerce, media, telecommunications, regulatory, data protection, trade practices and marketing issues. We also advise clients on issues related to copyrights, trademark protection and commercial secrets. Our team supports all kinds of disputes with regards to technology issues, media, advertising including those related to intellectual property assets.

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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