The Department of the Treasury on Sunday unveiled a host of new sanctions against Russian and Belarusian individuals and banks the U.S. believes are “critical to Russia’s ability to wage war against Ukraine.”
The action also included a ban on U.S.-based accounting, management consulting, and trust and corporate formation services to any person located in the Russian Federation.
The Treasury in a press release announced sanctions against the board members of two of Russia’s most important banks, a Russian state-owned bank and 10 of its subsidiaries, a state-supported weapons manufacturer, and three of Russia’s state-controlled television stations.
The ban on some professional services, meanwhile, “increases the pressure on the Kremlin and cuts off its ability to evade sanctions imposed by the United States and our partners,” Secretary of the Treasury Janet Yellen said in the release.
The professional services prohibition takes effect June 7. It does not cover legal services. A White House official, answering a question from the press Sunday, said U.S. sanctions could be broadened to include legal services at a later date.
The United States, European Union, and numerous other countries and territories have imposed sanctions on Russia following its Feb. 24 invasion of Ukraine. Some Western companies responded by suspending or shuttering their operations in Russia, while others continue to navigate emerging risks as they attempt to maintain doing business there.
U.S. law enforcement agencies, primarily the Department of Justice, have telegraphed an increasing emphasis on pursuing sanctions-related investigations. The agency in March established Task Force KleptoCapture to ensure compliance with sanctions and other measures taken to dampen the flow of money supporting Russia’s war.
Compliance Week asked the Big Four accounting firms—KPMG, PwC, EY, and Deloitte—for their responses to the Treasury’s latest action, which affects the services their firms can provide to Russian companies and customers.
“KPMG around the world continues to fully adhere to the sanctions introduced by various governments, which hopefully will contribute to bringing an end to this crisis,” the firm said in an emailed statement. KPMG had previously said March 6 it was severing its Russian and Belarusian firms from its network.
PwC said March 24 its Russian firm would leave its global network, that it would not undertake any work for the Russian government or state-owned enterprises, and that it would review all of its client relationships in Russia.
“PwC member firms outside of Russia will exit any work for Russian entities or individuals subject to sanctions,” the firm said. “We will apply sanctions regardless of their origin—even where sanctions are not legally required to be followed by a PwC member firm. Any sanction on Russian entities or individuals that is passed anywhere in the world will be applied everywhere in the world.”
EY referred comment to a March 7 statement, in which the firm said it ”will no longer serve any Russian government clients, state-owned enterprises, or sanctioned entities and individuals anywhere in the world” and that it was restructuring its Russian member firm “to separate it from the global network.”
Deloitte made a similar announcement March 7 that it was cutting ties with its Russian and Belarusian firms.
Compliance Week contacted representatives of the Big Three management consulting firms—Boston Consulting Group (BCG), Bain & Company, and McKinsey & Company—for comment as well. None of the firms responded.
BCG said March 4 it had suspended all work with Russian clients but would “honor our contractual obligations” and keep its Moscow office open.
In a March 7 statement, Bain, which also has an office in Moscow, said it “would not conduct any new client work in Russia. We have ceased our work with state-owned and government entities. Once existing engagements conclude, all client services in Russia will be suspended.”
McKinsey announced March 3 it would cease working with Russian state-owned and government entities and stop taking on new Russian clients. “After our remaining engagements in Russia conclude, all client service in the country will be suspended,” the company said.