International IT giants who do not comply with the new legislation will get their payments restricted in Russia.
According to the new bill, all payments to large foreign IT companies that do not register branches in Russia will be blocked.
Violators will be blacklisted. The first blacklist will include IT companies that do not comply with the law on registering a representative office in Russia (read more in my article “Large foreign Internet companies will have to establish representative offices in Russia“). Russian banks and payment service providers will be required to block any money transfers in favour of companies from this list.
The second blacklist will include foreign payment systems and financial intermediaries that accept payments in favour of IT companies from the first list. The Russian authority will give such foreign payment systems 30 days to eliminate the violation. Foreign payment service providers that have committed a repeated violation will be blocked in Russia.
On July 1, 2021, a law came into force obliging foreign Internet companies with a Russian audience of more than 500 thousand daily users to open branches in Russia (read more in my article “Large foreign Internet companies will have to establish representative offices in Russia“).
Following this law, the Ministry of Digital Development, Communications and Mass Media of the Russian Federation (also known as MinTsifry Rossii) published a draft resolution to block payments for all foreign IT giants that violated the law on opening a representative office in Russia.
According to the draft resolution, violating companies will be included in two different registries – black lists. The first list will include IT companies that have not complied with the law on opening a branch in Russia. All Russian banks will be required to block money transfers from individuals and legal entities to the blacklisted IT companies.
The second blacklist is intended for foreign payment service providers who will accept payments for companies from the first list. A foreign payment service provider will get a warning at the first violation and be given 30 days to eliminate the violation, i.e. block such payments. In case of repeated violation, all payments to this payment service provider will also be blocked.
The Federal Service for Supervision of Communications, Information Technology and Mass Media (also known as Roskomnadzor) will be responsible for maintaining both registries. These registers will be publicly available, except for personal data that may be contained in them.
Foreign companies that are blacklisted will have two options to be excluded from them:
- Notify Roskomnadzor that the company has complied with the law. Then Roskomnadzor will delete the information from the register within three business days.
- Challenge the decision about being blacklisted in a Russian court
The preliminary list of IT companies that will be required to open branches or representative offices in Russia already includes 20 platforms (sorted in alphabetical order):
- Digital Ocean
- Google Search
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