Businesses Externally Based Should Alter Their Data Protection Policies According to Russia's Recent Regulations
In the ever-evolving digital landscape, international companies doing business in or with Russia must navigate a complex web of data protection and internet laws that have recently become more restrictive. These new regulations impose criminal penalties for certain online activities, such as searching for extremist content and the use of Virtual Private Networks (VPNs) without cooperation with authorities.
The key requirements and considerations for companies operating in this environment include strict monitoring and cooperation obligations. Russian laws mandate search engines, social media, telecom operators, and internet services—including VPN providers—to collect, store, and hand over users’ search queries, browsing histories, and data access records to law enforcement upon request. Failure to comply can result in fines or criminal penalties.
VPN providers, in particular, must connect to Russia’s registry of blocked sites and restrict access to prohibited content, or face fines ranging from around £500 to over £50,000 for repeated violations.
The new legislation also criminalizes individuals who search for or access content deemed extremist, even if they use VPNs or other anonymizing tools. This represents a new legal risk for user behavior under Russian law.
Companies promoting or providing VPN services without mandatory filtering may be penalized, with administrative punishments for failure to provide authorities access to information systems and databases.
Russian authorities are also empowered to inspect devices and monitor internet usage directly, raising business risks regarding user data confidentiality and compliance with privacy promises.
In response, international companies must ensure their services comply with Russian data localization requirements and cooperate with government data requests. They should review and update data protection practices, user agreements, and privacy notices to reflect obligations under Russian law. Risk mitigation strategies related to VPN usage, data storage, and user monitoring should also be considered.
As regulations continue to evolve under geopolitical pressures, companies should maintain compliance monitoring and engage local legal counsel. The ongoing regulatory tracking is crucial, especially given the shortage in data center space and technical skills in Russia.
The data protection laws in Russia, signed by President Vladimir Putin in July 2014, came into effect on September 1st, 2015. Since then, Roskomnadzor, Russia's IT, telecom, and media regulator, estimates that 2.6 million organizations handle Russian consumer data.
The value of local representatives who can engage with Roskomnadzor and local lawyers in Russian cannot be overstated. Strategies for scaling IT infrastructure in Russia, such as renting colocation space, renting both space and hardware, or renting cloud capacity, should also be considered.
Without a subsidiary or presence in Russia, online businesses will be required to separate the data relating to Russian individuals and then store it in Russia. The potential cost savings and prevention of upheaval by renting both space and hardware, allowing for greater flexibility when data storage needs change or the business grows, are significant advantages.
The new laws could mean that organizations need to store a copy of Russian customer data in a Russian cloud or move their entire infrastructure to Russia. However, the effects of these new data protection laws may only become fully realized over time as they are put to the test in the courts or as the market changes its behavior.
International partners who can act as mediators when encountering local obstacles are invaluable in navigating this complex landscape. The importance of understanding the Russian market and finding a partner who is familiar with local customs and language, particularly given the majority of Russian systems integrators and internet service providers primarily work with Russian companies, cannot be overstated.
The conduct of exhaustive due diligence into telecommunications links into and out of Russia to ensure quality of service and manage data transfer is essential. The laws of supply and demand for data center space are likely to kick in very quickly in Moscow, which has one thousandth of the space available in London.
Any organization that falls foul of the new laws could face severe fines and have their websites blocked. International businesses operating online that procure and process data from customers across the world, such as travel companies and social networks, will be hit hardest.
Clear communication with customers around data processing at the point of transaction, often through an acknowledgement similar to term and agreement consent forms, is crucial. The need for a thorough understanding of the Russian market, a local partner, and a proactive approach to compliance cannot be overemphasized.
- In the Russian market, technology companies, particularly VPN providers, must adhere to strict data collection and sharing regulations with law enforcement agencies, as failure to do so could result in penalties.
- Understanding the lifestyle of Russian users and the relevant data protection laws is crucial for international companies looking to operate in the country, as the penalties for non-compliance can be severe.
