ELENA GLADYSHEVA, MANAGING PARTNER OF RI-CONSULTING

The Ministry of Defense wants to allow payments to servicemen and civilian personnel of the Russian Armed Forces only through banks which do not have foreign capital, according to amendments to the Law "On Defense" which are published for public discussion. The military authority proposes to leave this right only to those credit organizations which meet three requirements: their capital should not be less than 100 billion rubles, they should be under the control of Russia and have the right to dispose of information which constitutes state secrets.

The bill was elaborated in accordance with the instruction of the President dd. February 22, 2022, says the explanatory note and its aim is to protect the information about the places of deployment of military formations and personal data of the personnel of Russian Armed Forces. At present, payments are transferred to accounts opened through 77 credit organizations. Such a number of banks, "including those with the involvement of foreign capital" creates prerequisites for access of "third parties" to the data on the composition of the Russian Armed Forces, including the disclosure of affiliation to the Russian Armed Forces, locations of deployment, etc., says the supporting documents to the draft law.

At the end of 2021, according to Interfax, 16 Russian banks had capital exceeding Rb 100bn. Eight of them are controlled by the state (including indirectly) or the Central Bank: Sberbank, VTB, Gazprombank, Rosselkhozbank, Promsvyazbank, Otkritie Financial Corporation, VBRR, Dom.RF Bank.

Anatoly Aksakov (“Spravedlivaya Rossia”), Head of the Duma Committee on Financial Markets, said that there is logic in the bill if it is required to secure and limit as much as possible the information that "can somehow get away." "Although it is difficult to imagine such a thing, since the law already restricts [the use of information about the Russian Armed Forces]." In addition, apparently, the bill is aimed at protecting against possible risks associated with the suspension of the work of credit institutions due to anti-Russian sanctions, he believes: "That is, that payments go through banks that are under additional control of the state, to track both the movement of funds and the smooth operation of these banks, as well as to ensure strict protection of information.”

Andrei Krasov (“Edinaya Rossia”), First Deputy Chairman of the Duma Defense Committee, described the measure as "important" and assured that lawmakers will pay close attention to it. He said: "The information that passes through the banks is important because it includes personal data and other information. This scheme of work is similar to the one used when handling information about the state defense order: now there is a backbone bank [PSB] and authorized banks for the defense sector. Therefore, measures should be taken here, too, to protect the personal data of servicemen who perform combat tasks, among other things.

There are strict requirements for the banking system to retain client data, says Elena Gladysheva, Managing Partner of RI-Consulting. The bill may be drafted for several reasons, she believes. In particular, it may be a protection against data transfer from Russia or an additional measure to protect data in case of hacker attacks and unauthorized data leakage, which are struggling and cope with the banks' systems and from which no bank is immune.

"This may be due to the fact that unfriendly countries take actions aimed at obtaining additional information for sanctions, unauthorized in circumvention of the requirements of Russian legislation. Banks registered in Russia are subject to Russian law, but no one is protected from improper actions of beneficiaries," she says. As for the threat of disclosure of locations, the bank account can be used to determine the location of the branch where the account was opened, and the withdrawal of cash from ATMs or the use of online banks can be used to determine your geographical location. Therefore, if someone sets out to do so and violates all legal requirements, it is possible to determine a particular person's location from this data.

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