Profile – Elena Borisenko, Gazprombank

On joining Gazprombank in 2015, Elena Borisenko brought a wealth of experience from the Russian Ministry of Justice. Overseeing the legal function and coordinating legal aspects of the compliance function at Russia’s third-largest lender, she speaks to In-House Perspective about the challenges facing in-house counsel in Russia.

Ruth Green

Elena Borisenko joined Russia’s third-largest bank in 2015 from Russia’s Ministry of Justice. For many, the move would have been a daunting prospect but she says she was ready for a new challenge. ‘By the time I started to work at the bank, I had been in the government service for more than six years and began to think about returning to private business, where I could implement all my professional and managerial skills,’ she says.

She believes her time working for the Ministry stood her in good stead to work on large-scale projects in a large organisation. ‘Government service is all about responsibility and the scale of projects,’ she says. ‘Working for the state allows you to see the bigger picture and understand how everything in society and the economy is deeply connected. The government service is an excellent school, an invaluable experience that I highly recommend to all lawyers, especially young ones.’

Initially appointed First Vice-President, two years later, in September 2017, Borisenko was appointed Deputy Chairman on Gazprombank’s management board, overseeing the bank’s legal function and coordinating legal aspects of the compliance function. She works closely with Tatyana Kuzmina, who leads the legal team.

On joining the bank, Borisenko says she realised she could harness the knowledge gained from her previous experiences in private practice and working for the state to reinvigorate the legal department. ‘When I came to the bank in 2015 I realised that I needed every previous experience of mine, even if it was tiny,’ she says. ‘All knowledge and skills were simultaneously in demand. It’s as if you’ve been studying at school for a long time and didn’t understand why you need it. This gives a powerful impetus to improve the effectiveness of professional competencies. We have created a very good team and reset the work culture of lawyers in the bank.’

Today the legal department has four divisions, focusing on lending transactions; financial market transactions and corporate relations; payment services and business activities and judicial work. Borisenko also manages the legal department’s Project Office, which handles among others all activities related to legislation and law enforcement.

The bank has 289 lawyers working on Russia law-related issues. 127 are located in its head office in Moscow. A further 162 lawyers work in regional offices, including a team in Yekaterinburg that focuses on legal work related to the bank’s payment services, commercial contracts and certain ‘plain vanilla’ agreements. As coordinator at the group level, Borisenko also oversees in-house legal teams working at the bank’s representative financial institutions in Cyprus, Hong Kong, Luxembourg and Switzerland.

Although perhaps not a traditional in-house role, Borisenko says she has relished the opportunity to work with such a strong team of specialists on a wide variety of legal matters. ‘Unlike law firms, I, as a manager, do not face the issue of finding clients or projects,’ she says. ‘The legal department has about a hundred “internal” clients, which are always ready to test us with ambitious tasks.’

As a member of Gazprombank’s management board, Borisenko is keenly involved in determining strategy at the bank. She says this has been helpful as she feels strongly that in-house legal departments, just like the wider business, need to think strategically. ‘I can give an example of the interconnectedness of my roles: today the development of the retail business is one of the key areas of the Bank’s business and this trend is included in the target strategy of the Bank until 2022,’ she says.

‘Recent Russian law developments and the [European Union] General Data Protection Regulation [GDPR] means work aimed at defining legal structures for the use and processing of personal data, the direction of targeted advertising, the possibility of remote identification of our clients, the ability to remotely provide services to our clients and so on.’ Borisenko says this requires active input by the legal department to understand the types of issues facing the business teams in charge of developing retail products at the bank. This in turn, she says, gives the in-house legal team itself a much better understanding of the business’s needs.

Changes and challenges

Borisenko also coordinates legal aspects of the group’s compliance function, which is separate to the legal department. As with most banks, she says compliance is increasingly at the forefront of all the bank’s considerations. ‘Of course there never can be enough compliance,’ she says. ‘Being one of the major Russian banks and also an active player on the capital markets we have invested a lot of resources in building a robust compliance function and we are convinced to enhance it further using market best practices.’

‘So far we have been very successful in building internal corporate standards on legal risk and its monitoring in the bank and now we aim to spread them at the group level,’ she says.

The onset of US sanctions have created certain compliance challenges. In July 2014, the United States Department of Treasury imposed sectoral sanctions on several Russian entities, including Gazprombank. The sanctions prohibited US persons from entering into certain transactions with the bank.

Further sanctions have placed restrictions on certain debt and equity operations, effectively cutting the bank off from the US financial markets. ‘Generally, Gazprombank’s major counterparties worldwide maintain their own sanctions compliance programmes in order to make sure that all the operations with the bank are compliant with the existing sanctions regime,’ says Borisenko.

However, she says the sanctions have kept her legal team busy. ‘Despite this and given that in certain cases the US sanctions have an extraterritorial reach – by means of secondary sanctions – the legal department does a lot of educational work in order to explain to the counterparties all the peculiarities of the US sanctions regime,’ she says. ‘What is even more important for the Bank is to do the educational work with the clients – as well as clients’ customers and counterparties – in order to make it crystal clear that all sanctions restrictions do not affect clients and their business in any way. This is what the legal department does quite successfully.’

As with many banks, money laundering continues to pose a significant threat. In 2018, Switzerland’s Financial Market Supervisory Authority (FINMA) banned Gazprombank’s Swiss subsidiary from accepting new private clients after identifying ‘serious shortcomings in anti-money laundering processes’ related to the Panama Papers. Gazprombank Switzerland was originally known as Russian Commercial Bank, but was rebranded Gazprombank Switzerland in 2010 after the bank acquired it from VTB Bank.

Although Borisenko says that some of the ‘shortcomings’ identified predated its ownership, the bank took the opportunity to tighten its anti-money laundering (AML) and know-your-customer (KYC) procedures. ‘Although Gazprombank undertakes all necessary measures in order maintain proper AML and KYC compliance policies and practices, following the audit our main goal was to eliminate all the identified deficiencies and shortcomings in the existing files,’ she says. ‘As a separate and additional measure Gazprombank has also strengthened the local compliance team and also set up a Risk Committee which – as one of its main priorities, among other things – concentrates on supervising and setting an appropriate management and control framework for the compliance risks.’

Switzerland recently became the first jurisdiction to fully regulate a cryptocurrency exchange, making the Swiss arm the bank’s obvious focal point for developing its cryptocurrency-linked banking services. In December 2018, the bank announced it would develop a project to provide a cryptocurrency storage and wallet management solution integrated into Gazprombank Switzerland’s core banking system.

‘The reason for this initiative in Switzerland is obvious,’ says Borisenko. ‘Under government support, the financial authority in Switzerland (FINMA) has already defined the requirements and rules, following which banks and other institutions can develop crypto-related services to their clients. That made Switzerland one of the most attractive countries in the world for creating crypto-related projects and developing the crypto-ecosystem in general.’ The technological aspects of the bank’s project will be developed in partnership with a Swiss-based industry leader, alongside international experts in information security and compliance.

This move is particularly significant for the bank in light of recent legislative developments in Russia. In March 2019, the government passed a bill on digital rights to develop the digital economy. Although Borisenko says the bill does not clarify the ‘legal status’ of cryptocurrency assets in Russia’s Civil Code, she’s hopeful that this and other pieces of legislation will be a boon to the country’s digital banking sector. ‘The revised Civil Code and the upcoming set of related legislation will help banks to diversify product lines and selling chains allowing e-commerce and remote identification of clients, which will speed up and simplify banking services and significantly develop retail business.’

More generally, Borisenko welcomes the ongoing efforts to bring Russia’s banking and finance legislation and regulations in line with international standards and best practices. ‘Knowing the systemic differences between the civil law and common law countries, this initiative has been very challenging, but at the same time refreshing and rewarding,’ she says. ‘Due to this constant effort we can see that Russian law is being used more frequently as the law governing international transactions with certain foreign elements, especially where English law has always been the market standard.’

‘In this constantly changing regulatory environment and [given the] different government initiatives the challenge for me is to be able to vocalise the view and opinion of my team and to be able to promote it at a state level,’ Borisenko says. ‘We are very focused on the promotion and development of the legal framework in Russia, for making norms and regulations fair and open for all market participants.’

She says her team also keeps a close eye on international legislation that has an extraterritorial reach, including the EU’s GDPR, which has applied since May 2018. ‘For us, as a group with various streams of business, it is inevitable and we pay close attention to the constantly changing international regulatory framework.’

In-house parity

Borisenko believes there are a number of challenges facing in-house counsel in Russia today. ‘The first one is the promotion of the rule of law and building further the trust in law and its respect in all spheres of life,’ she says. ‘The role of in-house lawyers is gaining more and more weight in various business processes, not just in the Russian financial market, but in the industry as the whole, which makes it very important for in-house teams to cooperate closely, with the mutual aim of promoting the law.’

Like elsewhere in the world, she says technology continues to test Russian in-house legal departments. ‘In today’s technology-driven world, trying to keep up with technology with the traditional lawyer mind-set and resistance to change, it is important to find a balance,’ she says. ‘My team is up-to-date with recent innovations in legal tech and we aim to implement certain tools to minimise some routine and time-consuming work in order to maximise the team’s input into project work.’

As the only woman on Gazprombank’s management board, Borisenko is keen that female voices are heard, both in the legal department and across the bank more generally. ‘The face of the legal profession in Russia is female and I am proud to be a part of this family,’ says Borisenko. As a working mother of two young children, she says it’s vital that legal workplaces support women balancing family life and career ambition. ‘Luckily the bank is very attentive towards women willing to have a family and keep the career running,’ she says. ‘This helps me to combine my roles without losing my grip and affecting the results of the team. I wish that more women in this profession could relate to this topic with the same attitude.’

Borisenko also chairs the Supervisory Council of the St Petersburg International Legal Forum Foundation, which is now in its ninth year. She says gender equality was again a key topic of discussion at this year’s event, which took place from 14–18 May 2019 and welcomed more than 5,000 delegates from 91 countries to St Petersburg. ‘It is important for me to mention that every year during the St Petersburg International Legal Forum we organise a panel session dedicated to women in law, where women with different backgrounds but who are being successful in what they do come together to share their experience and inspire not just other women, but men as well,’ she says.

‘Gazprombank, as a long-term leading partner of the Legal Forum, arranges such events to bring together leading law firms and business representatives from all over the world,’ says Borisenko. ‘[This] paves the way for more profound international cooperation and improvement of the rule of law across the globe.’