On 24 February 2023, one year on from the beginning of Russia’s invasion of Ukraine, UK Foreign Secretary James Cleverly announced a new package of internationally coordinated sanctions and trade measures, including export bans on every item Russia has been found using on the battlefield to date.
These export bans relate to aircraft parts, radio equipment and electronic components that can be used by the Russian military-industrial complex, including in the production of unmanned aerial vehicles (UAVs). There is broad alignment in the timing and targets of these sanctions, with both the EU and US announcing similar measures.
According to the UK government, military intelligence has demonstrated a shortage of components in Russia due to sanctions. This should affect the country’s ability to produce equipment for export, such as armoured vehicles, attack helicopters and air defence systems. As a result, it is highly likely that Russia’s role as a reliable arms exporter – and its military-industrial complex – is being undermined by international sanctions.
The UK (and allies) sanctions further target senior representatives of Russia’s key industries and those involved in providing supplies used by Russia in Ukraine. New sanctions also target senior executives at Russian state-owned nuclear power company Rosatom, plus executives from Russia’s two largest defence companies, four banks (including MTS) and other Russian political and business elites.
The government explains that Rosatom has deep connections to the Russian military-industrial complex. It has reportedly been supplying arms manufacturers with the technology and materials needed to resupply Russia’s front line, including to defence firms that are under sanctions.
The expansion of the sanctions’ regime targets the following:
- export bans on every item Russia has been found using on the battlefield in Ukraine, including aircraft parts, radio equipment and electronic components;
- import bans on 140 goods, including iron and steel products processed in third countries, aircraft parts, radio equipment and electronic components that can be used by the Russian military-industrial complex, including in the production of UAVs;
- the extension of existing measures against Crimea and the non-government-controlled areas of Donetsk and Luhansk to target the non-government-controlled areas of Kherson and Zaporizhzhia;
- the designation of 80 individuals, including among others executives of Rosatom, Gazprom and Aeroflot;
- the designation of 12 Russian entities including, among others, four Russian banks: Bank St Petersburg, Bank Uralsib, Bank Zenit and MTS Bank;
- 34 executives connected to Russia’s two largest defence companies, Rostec, Russia’s multibillion state-owned defence conglomerate, and Almaz-Antey Corporation, a state-owned Russian company specialising in producing surface-to-air missiles and firearms for aircrafts;
- six Russian entities involved in the manufacture or repair of military equipment for Russia’s armed forces, including aviation and navy; and
- five senior Iranian executives in Qods Aviation Industry, the company manufacturing the drones used in Ukraine, which demonstrates a commitment to continue to pressure third countries supplying Russia’s military
In addition to these measures, the G7 is establishing an ‘Enforcement Coordination Mechanism’ for coordinating the enforcement of Russia sanctions. This will be chaired by the US in the first year. This new body aims to improve information sharing and sanctions enforcement directed at countries and firms suspected of helping Russia in Ukraine through circumvention of sanctions.
In practical terms, this latest tranche of sanctions builds upon the previous themes and areas targeted by the UK and western allies over the past year. “We recommend that firms review guidance produced by ICAEW and government with regards to ensuring adherence to sanctions, while maintaining a robust risk-based approach to working with current and potential clients,” says Mike Miller, Economic Crime Manager for ICAEW.
“We also emphasise the need for firms to carefully check instances in which they may be required to adhere with non-UK sanctions regimes, particularly those of the US and EU as they may diverge on specific areas. The sanctions landscape remains prone to short-notice change.”
ICAEW continues to work closely with stakeholders across government and Parliament to express concerns raised by the profession. It aims to make these measures workable and effective in practice, reducing the attractiveness of the UK for malicious actors while maintaining the competitiveness of the accountancy profession.
ICAEW latest on Ukraine and Russia
Ukraine crisis: central resource hub
Resources, news and features on the impact of the Ukraine crisis on accountancy, business and the wider economy.
Support for members during the Ukraine crisis
Technical and Ethics Advisory Services
ICAEW Members can contact our free confidential helpline for advice and support on technical, ethical, anti-money laundering and fraud issues.
Resources for members
Chartered Accountants from across the membership have reached out to share how they are responding to the sanctions. Many are re-screening all clients with connections to Russia. Here are some of the key resources to help you respond to clients' concerns.
Doing business in ...
Guides to affected countries
ICAEW's Library and Information Service produces guides for members who are considering doing business in overseas countries. There are separate guides for Ukraine and its neighbours, all of which include updates on the latest sanctions and restrictions.