The impact of fresh sanctions following the Russian invasion of Ukraine: what accountants need to know

AAT has issued a reminder that sanctions compliance is a critical issue for accountants and others in the regulated sector.

FOLLOWING the far-reaching sanctions against Russia, AAT (Association of Accounting Technicians) has issued a reminder that sanctions compliance is a critical issue for accountants and others in the regulated sector.  

After its aggression against Ukraine, the US, UK and EU launched new rounds of economic sanctions against Russia. These sanctions add to those already in place, following the invasion of Crimea in 2014. Additional economic measures introduced this week, including against the Russian Central Bank and the state’s sovereign wealth fund, mean the majority of Russia’s financial system is now covered by UK sanctions. 

The new measures prohibit UK individuals and entities from providing financial services to the Central Bank of the Russian Federation, as well as the Ministry of Finance and National Wealth Fund. The economic sanctions are likely to impact the work of accountants as well as many other regulated businesses. 

In broad terms, UK persons – incorporated entities, nationals and those in the UK – are prohibited from making funds or economic resources available to Russian persons and entities located anywhere across the world. Nor can they accept such funds or resources from them. These prohibitions also extend to dealings with businesses, that are directly or indirectly owned or controlled by these persons. 

Described by the UK government as the first tranche of new sanctions, further measures could be deployed in due course. 

Commenting on the issue, Sarah Beale, CEO, AAT, said: 

“As the key gatekeepers for the financial system, accountants have a significant role to play in ensuring the effectiveness of the unprecedented array of Russian sanctions. These measures require fresh due diligence and screening by accountants, and underscore the critical support that AAT members provide to ensure sanctions compliance.” 

In practical terms, members (if they have not already done so) should immediately and thoroughly assess any exposure they have to Russia or Russian persons and entities. Understanding potential exposure points will help members facilitate a rapid response to these new sanctions. Members must consider all partners or customers and their ownership structures, to identify any direct or indirect investment from Russian entities or individuals. 

If such funds are held, members must freeze such funds or resources and any others that are owned or controlled by persons listed in the Financial Sanctions Notice and must refrain from dealing with these assets or making them available (directly or indirectly) to persons listed unless licensed by OFSI (Office of Financial Sanctions Implementation) to do so. 

The full list of those subject to financial sanctions by the UK can be found at: 

Members are also encouraged to review the CCAB (Central Council of Accounting Bodies) guidance joint statement to the profession following recent and ongoing developments in the Ukraine, including updates on Politically Exposed Persons (PEP), financial sanctions and other prohibited relationships.   

Members must report any findings to OFSI and any information that would facilitate compliance with the sanctions and provide any information that OFSI may request. Failure to comply with the regulations or provisions is a potential criminal offence.   

Members can contact AAT (email or call (0)20 7367 1347) for advice on all aspects of compliance with the Money Laundering Regulations, including how to report suspected illegal activity considering the recent sanctions. Given this is an evolving and complex situation, AAT is also advising its members to obtain expert legal advice if required. 

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