“Digital residency” for foreign IT companies

On July 1, 2021, Federal Law N 236-FZ aimed at set up of a “digital residence” system for foreign IT companies entered into force.

From January 1, 2022, foreign IT companies with an audience of more than 500 thousand users per day in Russia are obliged:

• to register legal entities in Russia or set up branches / representative offices;
• to post an electronic form on their website for Russian citizens or legal entities for sending applications;
• to create a personal account on the website of Roskomnadzor.

These measures also apply to foreign companies that host information resources (hosting providers) and companies that operate information systems in Russia.

The full list of foreign IT companies subject to the new requirements is posted on the website of Roskomnadzor.

A branch, representative office or a subsidiary of a foreign IT company, according to the law, must ensure:

• receiving and considering applications from citizens and organizations;
• enforcement of court decisions and requirements of state authorities;
• representing the interests of the company in courts;
• restricting access to or removing information that violates Russian law.

A violation by an IT company of the new requirements could result in a ban on the distribution of advertising, restrictions on money transfers and acceptance of payments from Russian persons, a ban on search engines, a ban on the collection and transfer of personal data and partial or total restriction of access to the company’s website.

The enforcement provisions come into force on September 1, 2022.