Wave of new sanctions aims to cut off professional services to Russia
In response to the illegal annexation of several regions of Ukraine by Russia, the UK government have announced a series of new sanctions which will cut off Russia’s access to:
- IT consultancy services
- architectural services
- engineering services
- advertising services
- transactional legal advisory services
- auditing services
A further 700 goods crucial to Russian industry have been added to the export ban. These moves come alongside actions by Europe and the US. Additionally, the governor of Russia’s Central Bank, Elvira Nabiullina, has also been subjected to a travel ban and an asset freeze.
The UK accounts for nearly 60% of Russia’s legal service imports. The new legal advisory measures will cover certain commercial and transactional services and hamper Russia’s businesses’ ability to operate internationally. IT consultancy services, including designing systems and software applications, are also banned. This comes in addition to the bans on quantum computing recently implemented by the West.
The West aims to cut Russia off from access to professional services such as audit, bookkeeping, advertising and tax consultancy, aiming to disrupt and degrade the capability of Russian business to keep pace with the rest of the world. In total, nearly £19 billion worth of UK-Russia trade has been sanctioned.
The UK has also suspended the process by which actions are taken to manage the orderly failure of Russian banks are recognised in UK law, where the bank is a sanctioned entity.
An asset freeze prevents any UK citizen, or any business in the UK, from dealing with any funds or economic resources which are owned, held or controlled by the designated person. UK financial sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons, wherever they are in the world. It also prevents funds or economic resources from being provided to or for the benefit of the designated person.
Recently introduced powers make it a criminal offence for any Russian aircraft to fly or land in the UK and give the government powers to remove aircraft belonging to designated Russian individuals and entities from the UK aircraft register, even if the sanctioned individual is not on board. Russian ships are also banned from UK ports.
What to do now
It is imperative for all businesses, particularly those in the legal, IT, auditing and other affected sectors, to review their existing customers to ensure none are sanctioned entities.
All businesses must comply with sanctions. Train staff today and ensure that all policies, particular onboarding new customers and due diligence procedures, are up to date.
- Renew practice-wide and country risk assessments, particularly for the countries on the list, and for Russia
- Review client lists for those who require ongoing monitoring
- Review CDD and EDD procedures
- Strengthen sanctions screening processes and ensure sanctions checks are regularly undertaken
- Update sanctions training for all staff
- Review sanctions policy template with our free updated version
