Key insights
- New sanctions prohibit any accounting, entity formation, or management consulting services to any Russian or Belarusian person or entity.
- Examine your systems and operations for compliance, and identify areas where you need to review relationships, develop new procedures, or enhance existing processes.
- If you are unsure if you or your company are affected by the new sanctions, seek legal counsel to help avoid penalties and reputational damages.
Is your organization affected by the new sanctions?
On May 8, 2022, new sanctions against Russia and Belarus were announced by the U.S. government, through the Office of Foreign Assets Control (OFAC). Effective June 7, 2022, these sanctions prohibit the provision of accounting, entity formation, or management consulting services to any Russian or Belarusian person or entity. The new sanctions also prohibit organizations from assisting anyone in a transaction with a Russian or Belarusian person or entity.
If you are unsure whether you or your company is affected by the new sanctions, seek legal counsel. Assessing your situation and reviewing relationships can help avoid penalties and reputational damages.
Examine your systems and operations
- Assess core system updates to include areas such as Automated Clearing House transactions and files, wires processing systems, and onboarding systems
- Consider vendor management risk and review compliance with the sanctions
- Review your process of screening for new accounts, investors, loans, and other third-party offerings
Review existing and potential relationships
OFAC plans to aggressively penalize those in violation of the new sanctions ($330,000 per violation, or two times the value of the services rendered — whichever is greater), so evaluate your compliance carefully and act now. Start by identifying areas where you need to review relationships, develop new procedures, or enhance existing processes.
- Do any of your investors, donors, clients, related parties, or vendors have a connection to Russia or Belarus?
- Are any of your investors, donors, clients, related parties, or vendors 50% or more controlled by a Russian or Belarusian person or entity (likely identified through beneficial ownership)?
- Are any of your investors owned by offshore holding entities based in tax haven countries?
- Will any of your investors or related parties engage in any transactions related to Russia or Belarus?
- Do any of your investors or related parties have Russian or Belarusian citizenship?
Conduct global business with caution
Navigating the OFAC regulatory landscape can be a complex and arduous process. If your organization is engaging, or considering engaging, in any international business, seek legal counsel to verify the transactions are not prohibited. Conducting business overseas requires due diligence, planning, and consideration, and — in some cases — you may be required to obtain a license to legally supply foreign assistance. Even when the intent is to provide help through charitable means, failure to adhere to OFAC regulations can result in significant consequences and penalties.
How we can help
CLA has a robust regulatory compliance team that continues to provide seamless, integrated capabilities to our clients. Whether you need help understanding these sanctions, navigating your automated system parameters, or need a trusted advisor, we’ll get you there.
View our industry blogs for additional details specific to financial institutions, nonprofit, and real estate.