The UK government has responded to the full-scale Russian invasion of Ukraine with tougher economic sanctions that could potentially impact the work of accountants.

All major Russian banks will have their assets frozen and will be excluded from the UK financial system. This includes a full and immediate freeze of VTB bank. These banks will not be able to access sterling or clear payments through the UK.

It will legislate to stop Russian companies and the state from raising finance or borrowing money on UK markets. It will also stop exports of hi-tech items and oil refinery equipment, and dual use export licences that cover items that can be used for military purposes will be suspended. The Aeroflot airline will also be banned from landing in the UK.

From an individual perspective, there will be a limit on deposits that Russians can make to UK bank accounts, and asset freezes will be put on 100 new individuals or entities. Similar sanctions will be extended to Belarus for its role in the invasion of Ukraine.

Parts of the Economic Crime Bill will be brought forward before Easter recess. The Prime Minister Boris Johnson said there is potential to cut Russia out from Swift payments: “Nothing is off the table.”

“The UN Secretary General has urged the president of Russia to halt his invasion of Ukraine and prevent ‘what could be the worst war since the start of the century’,” says Michael Izza, ICAEW Chief Executive. “The UK government, standing alongside the US and EU, has announced a further package of sanctions aimed at demonstrating to the Russian elite the political and financial costs of their aggression.

“ICAEW is confident that chartered accountants, whether in practice or in business, will be ready and willing to play the fullest possible role in making these measures effective, and in helping companies across the economy cope with the disruption they will bring.”

What accountants need to know

Financial Sanctions Notices are issued under the Russia (Sanctions EU Exit) Regulations 2019. Members in practice must check whether they hold any funds or economic resources for the persons set out in the current Annex to the Financial Sanctions Notice.

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 annex to the Notice and must refrain from dealing with these assets or making them available (directly or indirectly) to persons listed unless licensed by OFSI to do so.

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 seeking to circumvent its provisions is a potential criminal offence.

It is therefore important that members fully understand the assets under the ownership and control of their clients. Members are advised to check the latest Sanctions list and guidance published by HMT and OFSI regularly.

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

• Financial sanctions targets: list of all asset freeze targets
• Russia: list of persons named in relation to financial and investment restrictions

Members must also be mindful of the current trade prohibitions issued by the Department of International Trade (DIT) in relation to Russia, including those that apply to military-related goods and technology or financial or technical assistance; energy-related services; and goods/tourism relating to Crimea. 

The DIT’s Export Control Joint Unit (in conjunction with the Foreign, Commonwealth and Development Office and OFSI) has issued detailed guidance in relation to Russia under s.43 of the Sanctions and Anti-Money Laundering Act 2018. The latest guidance – updated on 14 February 2022 – can be found here.

Members should note that these sanctions add to the ones already in place following the invasion of Crimea in 2014 and that the prohibitions include those on dual use goods (ie, those that may have more than one purpose).

The UK Government has also announced that sanctions imposed in relation to Crimea will be extended to the Donetsk and Luhansk regions.

This is a fluid situation and members are strongly recommended to obtain expert advice.

You can find an overview of the UK government's sanctions relating to Russia on GOV.UK, containing the latest guidance. 

Who to contact

If you have enquiries in relation to trade with Ukraine or Russia, you should contact the Export Support Service:

• Businesses can submit an enquiry to DIT’s Digital Enquiry Service or call the helpline on 0300 303 8955. 
• The ESS landing page features a dedicated link for Ukraine or Russia enquiries. 
• ESS will be the first point of contact for business and trade enquiries relating to Ukraine or Russia, as well as continuing to provide support to businesses exporting to Europe. 

EU and US sanctions

Both the US and EU have also imposed sanctions against Russia.

For the EU, you can find the latest on the EU sanctions against Russia over Ukraine crisis page on the European Union website.

Information about the sanctions imposed by the US Government can be found on the Ukraine-/Russia-related Sanctions page on the U.S. Department of the Treasury website.