May 12, 2022

Ukraine Crisis: U.S. Broadens Sanctions on Provision of Business Services

As the war in Ukraine rages on, the U.S. and its allies continue to ratchet up pressure on the Putin regime by expanding the scope of economic sanctions imposed on Russia.  This Ropes & Gray memo summarizes the latest round of sanctions, which extend to accounting, trust, corporate formation and management consulting services. Here’s an excerpt:

Executive Order 14071, issued on April 8, 2022, prohibits “the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person,” of any category of services subsequently identified by the U.S. government as impermissible. On May 8, OFAC, in consultation with the State Department, has now determined that the provision of accounting, trust, and corporate formation, as well as management consulting activities, to parties in the Russian Federation should be prohibited, effective June 7 (the “Services Determination”). In connection with the Services Determination, OFAC issued the following explanatory guidance:

– “Accounting services” includes any “services related to the measurement, processing, and transfer of financial data about economic entities.”

– “Trust and corporate formation services” includes “services related to assisting persons in forming or structuring legal persons, such as trusts and corporations; acting or arranging for other persons to act as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address for legal persons; and providing administrative services for trusts.”

– “Management consulting services” includes “services related to strategic advice; organizational and systems planning, evaluation, and selection; marketing objectives and policies; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management.”

We’re continuing to post resources in our “Ukraine Crisis” Practice Area on a daily basis. One recent addition that you may find helpful is this Jones Day memo, which provides a cross-jurisdiction summary of key Russia-related sanctions imposed by Australia, the EU, Japan, the UK & the US.

John Jenkins