US Sanctions Targeting Russia - What Professional Services Must Know Now

 The latest ramp-up in sanctions targeting Russia by the Biden Administration has a two-fold objective. One is to prevent the use of certain US services to create wealth to fund the Putin war machine. The other is to close loopholes in evading sanctions. Those services sanctions focus on accounting, trust and corporate formation, and management consulting.

BACKGROUND

In its Client Memorandum, Wall Street law firm Paul Weiss provides the background on these most recent sanctions about certain services, the details, implications, and the key takeaway. Its chairperson since 2008 is Brad Karp.

On May 8, 2022, the sanctions were imposed through a new determination under the Executive Order 14071, “Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression.” Here is the original E.O. 14071, issued April 6, 2022. The effective date for the implementation for the new sanctions is June 7, 2022.

Along with that, the Office of Foreign Assets Control (OFAC) issued another determination. That imposed sanctions against any person intending to operate or has been operating in Russia’s accounting, trust and corporate formation services, and management consulting sectors.

IMPLICATIONS

Paul_Weiss_Logo_1.svgWhen it comes to sanctions against Russia Paul Weiss makes it its business to connect the dots on government initiatives and identify the implications for both companies and individuals.

Paul Weiss highlights these:

US companies and other entities engaged in accounting, trust and corporate formation, or management consulting. Even if those services aren’t their core business, they should assess if the new sanctions affect them and understand the enforcement risks.

Non-US Companies. Those engaged in business with a nexus to the US also have to assess if the sanctions apply to them and calculate the enforcement risks.

Ongoing determinations. It is likely the OFAC will continue to add on determinations pertaining to what services will be prohibited to export to Russia under E.O. 14071.

Individuals. When it comes to evolving sanctions under E.O. 14071 to other kinds of services, it is anticipated that individuals will also have to conform. Those individuals include US persons and those who are not.

Restrictive export controls. Those apply to myriad forms of higher technology, including software.

THE NUMBER-ONE TAKEAWAY

What should be obvious is that for two and a half months US sanctions targeting Russia have been works-in-progress. Over and over again in its analysis Paul Weiss hammers that because both the objectives and the content of those sanctions continue to evolve, business and individuals must monitor the actions government is taking. Paul Weiss’ mission is to keep the business community up-to-date on re-interpretations, extensions, and additions.

FOR FURTHER CLARIFICATION

The Paul Weiss sanctions update lists a number of experts within the firm who provide additional insight and guidance.

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. Now and then she does freelance communications assignments for professional services firms such as Paul Weiss.

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