Sanctions Monitoring. Consulting Services

20 June 2022

The new sanctions measures have affected the sphere of consulting services – now their provision on the territory of the Russian Federation is significantly limited.

EU sanctions

Starting from June 4, 20221, the European Union imposes restrictions on the provision (directly or indirectly) of the following consulting services to citizens and companies of the Russian Federation, as well as to the Government of the Russian Federation:

  • accounting

  • auditing (including statutory audit)

  • bookkeeping or tax consulting services

  • business and management consulting

  • public relations services

Exceptions to the rules are:

  • provision of services that are strictly necessary for the exercise of the right of defense in judicial proceedings and the right to an effective legal remedy

  • provision of services to entities established under the legislation of the Russian Federation, but owned or controlled by a persons established in accordance with the legislation of one of the EU Member States

  • provision of services under contracts concluded before June 4, 2022 – up to their termination, while such contracts must be terminated no later than July 5, 2022

However, this prohibition is not absolute: under the decision of competent authorities it is possible to authorize provision of consulting services if it is necessary to achieve humanitarian purposes or for the activities of organizations that ensure the rule of law, human rights and democracy on the territory of the Russian Federation.

US sanctions

At the beginning of April 20222, similar restrictions were adopted by the United States – a complete ban was imposed on the export, re-export, sale or supply, directly or indirectly, by any American person, regardless of his location, of any type of services to a person located in the Russian Federation.

Under the direct ban from June 7, 2022 also fall3:

  • accounting

  • trust and corporate formation (as well as mergers and acquisitions)

  • management consulting

  • strategic business advice

  • development or evaluation of marketing programs or its implementation, brand management

  • HR-services, etc

In accordance with two licenses issued by the US Treasury Department, consulting services in the territory of the Russian Federation should be discontinued from July 7, 20224 and audit services – from August 20, 20225. At the same time, it is allowed to provide services for the supply of tax preparation-related software to the Russian Federation6.

UK sanctions

The UK, in turn, also announced a ban on the provision of accounting, management and PR services by British companies in relation to Russian persons7. However, the corresponding decree was not published yet.

Russia’s response to sanctions

In response to the sanctions imposed, in Russia amendments were adopted to the Administrative Regulations on maintaining the Register of lawyers of foreign states engaged in advocacy in the territory of the Russian Federation8.

From June 14, 2022 one of the grounds for refusing to register a foreign lawyer in the register for practicing law in the territory of the Russian Federation, as well as canceling his registration in the said register, will be the presence of such a person’s status as a lawyer in a state unfriendly to the Russian Federation.