Overview of the Federal Law No. 236-FZ “On the Activities of Foreign Persons on the Internet Information and Telecommunication Network in the Territory of the Russian Federation”

Federal Law No. 236-FZ “On the Activities of Foreign Persons on the Internet Information and Telecommunication Network in the Territory of the Russian Federation” of 1 July 2021 (hereinafter - Law) regulates  foreign persons’ operations via the Internet in the territory of Russia.

The Law aims to ensure equal conditions for operations of Russian and foreign legal entities in Russia.

I. Scope of the Law

It is set forth in the Law that it applies to foreign persons operating via the Internet network in the territory of the Russian Federation (hereinafter — RF). At the same time, it does not imply expansion of RF territorial borders into the virtual space of the World Wide Web. The legislator identifies a number of aspects of foreign persons’ operations, which, in total, fall within the scope of the Law, in particular:

1. A foreign person carries out activities that are not prohibited in the Russian Federation.
2. A foreign person is the owner of an information resource:

• internet site;
• pages on the website;
• information system;
• software for electronic computing devices (for example, computer software or mobile apps);

with daily audience of more than 500 000 users in the territory of Russia.

3. Additionally, at least one of the following conditions must be met:

• the information resource contains information in Russian language /state languages of the RF republics / languages of indigenous ethnic groups of the Russian Federation;
• the information resource distributes advertising targeting Russian consumers;
• a foreign person processes information about users located in the Russian Federation;
• a foreign person receives monetary funds from Russian sources.

Besides, the Law applies to:

1. foreign hosting providers or other persons providing information through the Internet, inter alia, for users located in the territory of the Russian Federation;
2. advertising system operators (foreign persons maintaining operations of an information resource intended and used to ensure distribution of advertising through the Internet to entice consumers located in the territory of the RF through information resources owned by third parties);
3. organisers of information distribution through the Internet (foreign persons ensuring the functioning of information resources that are intended and (or) used for receiving, transmitting, delivering and (or) processing electronic messages of Internet users, including those located in the territory of the RF).

The Russian Federal Service for Supervision of Communications, Information Technologies and Mass Media (hereinafter — Roskomnadzor) determines which persons belonging to the above three categories fall within the scope of the Law.

II. Law provisions

The Law imposes the following obligations on foreign persons described in Section I of this overview.

1. To develop an electronic feedback form for Russian citizens and organisations.
2. To create a personal account (hereinafter - PA) on the Roskomnadzor website and use it for interaction with government agencies. Legally significant messages will be exchanged through the PA. Also, the PA shall be used to submit an application for inclusion in the to be developed list of foreign persons operating through the Internet in the territory of the RF (hereinafter — Register of Foreign Persons).
3. To set up, by 1 January 2022, a branch, representative office or legal entity (hereinafter - Representation) in the territory of the RF and ensure its operations.

The Representation shall:

• accept all forms of feedback from Russian citizens and legal entities;
• fulfil decisions of Russian courts and state bodies;
• represent the interests of a foreign person in Russian courts;
• delete information violating the RF legislation or restrict access to it;
• provide information at the Roskomnadzor’s request (this may be, for example, information instrumental in identifying the site owner).

III. Powers of the Roskomnadzor

The Roskomnadzor maintains the Register of Foreign Persons, requests information, organises monitoring of information resources and approves of a methodology for determining the daily number of users.

The Register of Foreign Persons contains information about information resources with a daily audience of more than 500,000 Russian users, data about the owners of such information resources and sanctions imposed on them.

If the Russian audience of the information resource does not exceed 500,000 users during three months, a foreign person may send an application to the Roskomnadzor for its exclusion from the Register of Foreign Persons. If the number of user visits does not exceed 500,000 during six months, the Roskomnadzor excludes a foreign person from the Register of Foreign Persons at its own discretion, without a special application from a foreign person.

IV. Consequences of non-compliance with the Law provisions

The Law provides for the following sanctions for violation of its provisions:

1. advising information resource users located in the RF of violation by the information resource owner of the RF legislation requirements (through web search engines when issuing information about the violator);
2. prohibiting advertising a foreign person and its information resource in the RF territory;
3. prohibiting distribution of advertisement on an information resource (a ban for advertisers);
4. restricting money transfers and acceptance of payments from Russian persons in the RF territory;
5. prohibiting search engine results;
6. prohibiting collection and cross-border transfer of personal data;
7. partial restriction of access to an information resource;
8. full restriction of access to an information resource.

These sanctions may be applied in the following cases:

a) violation of the Law provisions, including where:

• no electronic feedback form has been developed for the Russian persons;
• no PA is registered on the Roskomnadzor website;
• no Representation has been opened by 1 January 2022

b) violation of the requirements of other Russian legislative acts, including:

• failure to comply with the requirement to delete information or restrict access thereto;
• failure to comply with the rules for handling personal data;
• failure to comply with requirements to provide information about advertising to the Roskomnadzor.

Several measures may be applied to foreign persons simultaneously. At that different sanctions can be applied in different cases. For example, in case of non-compliance with the Law provisions, only the first four measures listed above can be taken. If, 30 days after the application of these measures, such persons fail to stop violating the Law or other Russian laws, they may face measures 5 to 8.

V. Specifics of Law enactment

The Law was enacted on 1 July 2021, but some of its provisions should come into force only in 2022. The requirement to establish a Representation takes effect on 1 January 2022, and the provision on imposition of sanctions (Section IV of this overview) for the failure to submit information about advertising to the Roskomnadzor in violation of the advertising legislation requirements, — on 1 September 2022.

VI. Main conclusions

The Law applies to owners of large Internet sites (web pages, programs) with an audience of more than 500 000 users per day in the RF territory, which publish information in the Russian language (languages of constituent entities of the RF/languages of indigenous ethnic groups of the RF) or advertisements aimed at Russian consumers, or data is collected about users located in the RF territory, or the owner of such sites receives funds from Russian persons. Besides, the Law applies to a limited number of persons determined by the Roskomnadzor (providers, advertising systems, information distribution operators).

The Law may apply to owners of any information resources on the Internet, including entertainment sites, online stores, web search engines, messengers, mass media, hosting providers, etc.

At the same time, based on literal understanding of the Law wording, its requirements can also apply to individuals (for example, bloggers, streamers or other public persons on the Internet). However, the scope of the Law is not likely to include these individuals, since the purpose of the Law is primarily to affect foreign IT giants (for example, Google or Facebook).

According to some experts, the requirements of the Law will affect only about 20 largest companies. Among them there are, for example, Facebook and Twitter social networks, Google and Bing search engines, Gmail e-mail service, and WhatsApp and Telegram messengers.

Once again, we note that all foreign persons falling within the scope of the Law must open a branch or representative office in the RF territory or establish a Russian legal entity by 1 January 2022. In case of failure to comply with this requirement, restrictive measures may be applied to foreign persons - a ban on advertising, a ban on money transfers, restriction of access to an information resource, etc.

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This overview is not an exhaustive description of all the Law features, does not constitute a legal opinion on the issues set out therein, and does not and cannot substitute the need to obtain legal advice in a specific practical situation. BDO Unicon AO specialists are always happy to provide you with required assistance in explaining new legislation initiatives and support in their application in practice.