In pursuit of sanctions against Russia, the United States and the European Union have announced new sanctions and export controls to target other industries and government officials. On a new front, the US and EU have included a ban on accounting and business consulting services. The new US restrictions extend to sweeping export controls and targeted sanctions on Russian banking executives, an arms manufacturer and state media.
The expansion of US export controls covers a wide range of commercial and industrial operations, including wood products and construction machinery. The new export controls revolve around strict licensing controls to Russia and include approximately 200 new product categories in the list of items requiring a license for export to Russia. Many of these new export controls correspond to existing measures already adopted by the EU. These controls extend and range from air conditioning equipment to elevator parts, ironing machines and metal finishing machine tools.
US and European restrictions have had a direct impact on Russian tank manufacturing – two Russian factories, Uralvagonzavod Corporation and Chelyabinsk Tractor Plant, have suspended operations. Other Russian manufacturing companies have slowed operations due to component shortages. US and European controls originally focused on microchips and electronics and now extend to industrial products. Russia has had difficulty obtaining supplies from other sources.
The United States also adopted new sanctions restrictions, including designations against Russian state-controlled media entities and banks. OFAC named individuals and entities critical to Russia’s ability to wage war on Ukraine, including board members of major banks, Sberbank and Gazprombank, the Industrial Bank of Moscow, and 10 of its subsidiaries. OFAC appointed eight executives to Sberbank and 27 officials to Gazprombank and executives to Moscow Industrial Bank.
OFAC did not ban or freeze all of Gazprombank’s assets. Two Russian banks, Sberbank and VTB, are subject to total bans.
OFAC has issued two new guidelines prohibiting the provision of certain management consulting and accounting services to Russia. The ban did not extend to legal services, but noted that such a ban could occur in the future.
OFAC issued three new general licenses and updated General License 33, allowing certain transactions with Channel One Russia, NTV Broadcasting Company and Television Station Russia-1 until June 7, 2022.
General License 34 allows for the phasing out of accounting, trust, and business formation or management consulting services in Russia until July 7, 2022.
General License 35 allows credit rating and auditing services to Russia until August 20, 2022.
Finally, the US and EU recommitted to phasing out and eventually banning imports of Russian oil “in a timely and orderly manner”.