International databases are the main source of information when conducting compliance and KYC procedures by foreign financial institutions and financial supervisory authorities. Database operators, including Dow Jones, Refinitiv, Bloomberg, Accuity, search and systematize publicly available information about almost all subjects of large and medium-sized businesses, including Russian companies, as well as beneficiaries and members of the management bodies of organizations. Unfortunately, the information in such databases is often irrelevant and does not correspond to reality.
In the context of unprecedented sanctions pressure on Russian business, many clients of LINNIKOV & PARTNERS faced unilateral refusals to further cooperation from foreign contractors and a unilateral rupture of long-term contractual relations, often without explanation. As it turned out, many foreign companies and banks, as well as government agencies of the member states of the European Union and the United States, make decisions based on outdated or unreliable information contained in international business intelligence databases.
Almost every Russian organization has a separate profile in such systems as Dow Jones, Refinitiv, Accuity, Bloomberg, Thomson Reuters and some others. The profile contains both up-to-date information about the owners and management of the company, as well as archival information with links to publicly available sources. A separate section, as a rule, is devoted to direct and indirect sanctions risks, as well as the relations of a particular company with persons who have fallen under the sanctions of the EU, the United States or other countries. At the same time, database operators collect information not only about legal entities, but also about a variety of individuals — shareholders and heads of Russian companies, including members of collegial management bodies (including members of the boards of directors).
It is worth noting that the collection of information about Russian individuals is carried out without their notification, and the already processed information is available only to registered users (subscribers) of analytical services. Currently, registration of Russian citizens and companies in international databases, as well as payment for tariff plans that allow you to view the necessary information, is practically excluded. At the same time, the risk of fixing irrelevant or unreliable information received by services from the “yellow” press and unofficial media in such databases is steadily increasing, which obviously negatively affects the international reputation of Russian companies and entrepreneurs.
So, in addition to breaking contractual relations with foreign counterparties, there is a risk of new sanctions against individuals or companies that, according to the information contained in reputable databases, are seen in “suspicious” connections with designated persons. Moreover, according to our information, when making decisions on the introduction of new sanctions, EU and US government agencies, primarily the Office for Control of Foreign Assets — OFAC, actively use information collected by international databases.
In such a difficult situation, L&P attorneys have found effective ways to interact with almost all operators of international databases. Thus, thanks to the well-coordinated work of the L&P team, in 2023 it was possible to correct unreliable and outdated information about a number of individuals who previously held senior positions in large Russian companies, as well as make significant changes to the profiles of several large Russian financial companies and banks that were mistakenly classified as “suspicious” persons from the point of view the point of view of the applicability of EU and US sanctions.
Specifically, in some cases, the following was achieved in the sphere: false information about an individual who previously held senior positions in a number of companies that fell under blocking US sanctions was deleted. In addition, it was possible to make changes to the “special column” of the profile of a legal entity, whose composition of shareholders and management bodies changed shortly before some of these shareholders were included in the EU sanctions lists. An official conclusion was obtained from the legal department of the operator of another database on the non-sanctionality of the principal of L&P and that any coincidences with sanctioned legal entities with similar names are unreliable and not worthy of attention. Thus, L&P’s principals were able to protect their business reputation, as well as significantly reduced the risk of new and secondary sanctions being applied to them.
“Editing unreliable information in international databases requires a lot of attention and an individual approach. By default, database operators respond only to their customers’ requests and do not provide information to third parties. However, the right to disseminate reliable information, as well as the ability to demand the cessation of the dissemination of false and defamatory information are inviolable from the point of view of EU, US and UK legislation, which allows us to make direct requests for the provision and editing of information about our clients. At the same time, each such request requires both the collection of evidence of unreliability of information and an in-depth study of the rules of each analytical platform. In addition, it is necessary to take an active position in defending your rights, periodically remind yourself of yourself with new letters and calls. On average, it takes 3–4 months to review a single request, and not always the initial response satisfies us and our client. However, in the end, it is almost always possible to update information and make changes, albeit sometimes with reservations,” comments Anton Minakov, L&P’s Attorney-at-Law.
