The United States continues significant and unprecedented action in response to Russia’s invasion of Ukraine by imposing severe economic costs that will have both immediate and long-term effects on the Russian economy and financial system. On May 8, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated individuals and entities critical to Russia’s ability to wage war against Ukraine. The Treasury is also taking action to cut off Russia’s access to certain key services from U.S. companies, which Russian Federation companies and Russian elites use to build wealth, generate revenue for Putin’s war machine, and evade sanctions.
Further Detail
The OFAC issued a determination under President Biden’s Executive Order prohibiting the exportation, re-exportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of accounting, trust, and corporate formation, and management consulting services to any person located in the Russian Federation. This prohibition took effect on June 7, 2022.
In conjunction with this determination, OFAC is issuing new guidance and general licenses authorizing certain transactions related to these services. This action means that the Russian Federation and Russian elites will no longer benefit from U.S. companies’ valuable accounting, trust and corporate formation, and management consulting services.
In parallel with this action, OFAC has identified the accounting, trust and corporate formation services, and management consulting sectors of the Russian Federation economy under Executive Order. This determination allows for sanctions to be imposed on any individual or entity determined to operate or have operated in any of those sectors and expands the United States’ ability to swiftly impose additional economic costs on Russia for its war of choice in Ukraine.
Wrap Up
This action builds on previous determinations providing for sanctions against those that operate or have operated in the aerospace, marine, electronics, financial services, technology, and defense and related materiel sectors of the Russian Federation economy. It will be interesting to see if any further action is taken by the US government as the Russian invasion continues.