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OFAC amends 3 Russia-related FAQs

Here are the updated FAQs:

1034. For the purposes of the determination of May 8, 2022 made pursuant to Executive Order (E.O.) 14071, “Prohibitions Related to Certain Accounting, Trust and Corporate Formation, and Management Consulting Services,” what is meant by the terms “accounting,” “trust and corporate formation,” and “management consulting” services?

Answer

For the purposes of the determination of May 8, 2022 made pursuant to E.O. 14071, OFAC anticipates publishing regulations defining these terms to include the following:

  • “Accounting services” – includes services related to the measurement, processing, and evaluation of financial data about economic entities.  Please note that OFAC has issued General License 35 to authorize certain transactions ordinarily incident and necessary to the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of credit rating or auditing services to any person located in the Russian Federation through 12:01 a.m. eastern daylight time, August 20, 2022.  See FAQ 1035.
  • “Trust and corporate formation services” – includes services related to assisting persons in forming or structuring legal persons, such as trusts and corporations; acting or arranging for other persons to act as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address for legal persons; and providing administrative services for trusts.  Please note that all of these activities are common activities of trust and corporate service providers (TCSPs), although they may be provided by other persons.
  • “Management consulting services” – includes services related to strategic business advice; organizational and systems planning, evaluation, and selection; development or evaluation of marketing programs or implementation; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management.

This determination excludes from the scope of the aforementioned services:  (1) any service to an entity located in the Russian Federation that is owned or controlled, directly or indirectly, by a United States person; and (2) any service in connection with the wind down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person.

For the purposes of the determination of May 8, 2022 made pursuant to E.O. 14071, OFAC anticipates publishing regulations defining the term “Russian person” to mean an individual who is a citizen or national of the Russian Federation, or an entity organized under the laws of the Russian Federation.

Updated: May 11, 2022

1035. For the purposes of Russia-related General License 35 what is meant by the terms “credit rating services” and “auditing services?”

Answer

The term “credit rating services” means services related to assessments of a borrower’s ability to meet financial commitments, including analysis of general creditworthiness or with respect to a specific debt or financial obligation.

The term “auditing services” means examination or inspection of business records by an auditor, including checking and verifying accounts, statements, or other representation of the financial position or regulatory compliance of the auditee.

General License 35 authorizes certain transactions ordinarily incident and necessary to the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of credit rating or auditing services to any person located in the Russian Federation through 12:01 a.m. eastern daylight time, August 20, 2022. 

Updated: May 11, 2022

1038. For the purposes of the determination of May 8, 2022 made pursuant to Executive Order (E.O.) 14024, what is meant by the terms “accounting,” “trust and corporate formation services,” and “management consulting” sectors of the Russian Federation economy?

Answer

For the purposes of the determination of May 8, 2022 made pursuant to E.O. 14024, OFAC interprets the following terms to include activities related to products and services in or involving the Russian Federation in the following:

  • “Accounting sector” – includes the measurement, processing, and evaluation of financial data about economic entities.  
  • “Trust and corporate formation services sector” – includes assisting persons in forming or structuring legal persons, such as trusts and corporations; acting or arranging for another person to act as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address for legal persons; and providing administrative services for trusts.
  • “Management consulting sector” – includes strategic business advice; organizational and systems planning, evaluation, and selection; development or evaluation of marketing programs or implementation; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management.

The determination regarding these sectors pursuant to E.O. 14024 takes effect immediately.

Updated: May 11, 2022

Links:

OFAC Notice

FAQs 1034, 1035, 1038

Categories: Frequently Asked Questions (FAQ) Guidance OFAC Updates Russian Harmful Foreign Activities Sanctions

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