On June 9, 2022, the US Department of the Treasury’s Office of Foreign Assets Control published new Frequently Asked Questions (FAQs 1058 – 1068) related to Russian Harmful Foreign Activities Sanctions in order to address and clarify Executive Order 14071 and the May 8, 2022 determination (“the determination”) that prohibits certain services involving accounting, trust and corporate formation, and management consulting by US persons to the Russian Federation.
OFAC issued FAQ 1058 to define “person in the Russian Federation” for purposes of section 1(a)(ii) of EO 14071 and emphasize that the prohibitions on the exportation, reexportion, sale, or supply of services by US persons extend not only to persons located in the Russian Federation, but to Russian persons wherever located as well as the provision of indirect services that would result in a “person in the Russian Federation” ultimately receiving the benefit for the service provided.
OFAC also provides that, under certain circumstances, the determination does not prohibit US persons from i) providing services to persons located outside of Russia that are owned or controlled by persons located within Russia (FAQ 1059); ii) serving as directors of companies located within Russia (FAQ 1060); or iii) working as employees of entities located within Russia (FAQ 1061). However, OFAC reports that the prohibitions would apply to a US subsidiary whose parent company is located within Russia (FAQ 1062) and apply to both the formation of new and existing trusts and companies (FAQ 1063); to executive search and vetting services and a number of related management consulting services (FAQ 1064); and prevent US persons from serving as voting trustees on behalf of, or for shares of, persons located in Russia, unless otherwise exempt or authorized by OFAC (FAQ 1065). In addition, tax preparation and filing services are considered to be prohibited accounting services under the determination, unless they are otherwise exempt or authorized by OFAC (FAQ 1068).
Finally, OFAC indicates that the determination does not necessarily prohibit US persons from providing educational services on the subject of accounting, management consulting, or trust and corporate formation (FAQ 1066) to persons located in the Russian Federation or providing them with software on these subjects (FAQ 1067).