US sanctions against the Federal security service of Russia (FSB) can have unexpected consequences for American business and for the Russian consumer. About it writes RBC.
Electronics market Russia may suffer from the sanctions imposed by former President Barack Obama at the end of 2016 at the fact that the FSB is responsible for the permission on import of technologies in Russia.
The fact that, under Russian law, the import into Russia of any devices with encryption – and it and mobile phones, and tablets, and even ordinary wireless mouse, are subject to mandatory consultation with the FSB (so-called notification), but American suppliers are now prohibited from any commercial interaction with the Russian secret service.
About the risk of administrative contacts with FSB of its customers were warned, for example, lawyers Baker McKenzie.
“Because of the FSB performs certain administrative functions such as review and approval of commercial encryption products for import and distribution in Russia, the effect for certain us companies and individuals doing business in Russia can be substantial,” write the lawyers, Baker McKenzie, adding that technology companies is now the United States may need to apply for permission for service by the sanctions of the U.S. Treasury (OFAC) to submit the relevant documents to the FSB.
Why you need a notification in the FSB?
OFAC sanctions prohibiting American companies to cooperate with the FSB, potentially affect a very large number of American businesses are “practically the entire industry”, says a source in the field of international legal consulting.
According to him, this information is actively discussed by market participants, “the whole industry knows about it”.
The representative of a major foreign manufacturer of the phone, who requested anonymity, said that managers in their headquarters now analyze the situation. He explained that without the receipt of the notification of the FSB is a new model smartphone or other device containing the encryption module, can be supplied to the Russian market.
“To get a notification, we send to the FSB request, which contains information about the weight, the size of the device, the encryption algorithm modules Wi-Fi, Bluetooth, and GSM (a wireless data transfer technology, – Ed.) about which operating system it works”, lists the source.
Side effect for American companies
The ban on cooperation with the FSB could be a problem for American business, said the head of the Washington law firm Ferrari & Associates, specializing in sanctions, Erich Ferrari.
“In my opinion, OFAC may soon issue a General license for interaction with the FSB or clarification on the restrictions imposed if the service has not provided,” he says.
Clif burns of Bryan Cave believes that such consequences for American suppliers – an unintended effect of the sanctions.
“Probably, OFAC, bringing in the sanctions list of the FSB, did not try deliberately to this effect as interference for U.S. companies when exporting to Russia of cryptographic products, so there’s a chance that will subsequently be issued a General license permitting U.S. companies interaction with the FSB in the range of obtaining permits,” explained burns.
At the end of 2016, OFAC issued a General license allowing American companies to do business with the FAA “Glavgosexpertiza of Russia” on the territory of Russia, except the Crimea. Glavgosexpertiza was included in the sanctions list of the OFAC in September due to the participation in the project of the Kerch bridge. As the head of the American chamber of Commerce (AmCham) in Russia, Alexis Rodzianko, the chamber lobbied for an exception for her.
Who else has banned contacts with the FSB
Now the situation is complicated by the fact that at the beginning of January 2017, to its sanctions list, the Entity List Federal security service added and the Bureau of industry and security (BIS), a special unit of the U.S. Department of Commerce. Sanctions BIS ban all exports of American goods, software and services for the FSB (even if the vendor is not an American company).
However, as at submission of the notifications of the company disclosed to the FSB, some technical information about encryption products, it may be deemed to be a prohibited technology transfer, and require separate permissions BIS, burns explained.
We will remind, in the end of 2016 goodbye 44th US President Barack Obama secured at least a year of sanctions against Russia, Iran, Cuba, Libya, Zimbabwe and Venezuela.
In an interview with the U.S. edition of the Wall Street Journal in mid-January, U.S. President Donald trump said that it would maintain sanctions against Russia “at least for some time.” For their withdrawal, according to the billionaire, it is necessary that Moscow has shown its benefits in the fight against terrorism, as well as in achieving other goals that are important to US.