New Russia Sanctions Include Ban on Use of Accounting, Consulting Services

Russia’s invasion of Ukraine has resulted in widespread global condemnation along with a spate of economic sanctions focused on ratcheting up the pressure on the Russian government, its economy, and the oligarchs who benefit most from it. The U.S. government has been particularly assertive in its actions, recently announcing the implementation of new sanctions that include barring Russian companies and citizens from hiring U.S. accounting, marketing, and consulting services.

While the latest sanctions are part of an effort to officially punish Russia for its invasion and alleged war crimes against civilians, the consulting industry has largely boycotted Russian public and private sector clients for months. Firms such as Boston Consulting Group and Accenture announced in March that they would suspend work with Russian clients and offer reassignment or relocation to Russia-based staff, while PwC, Deloitte, KPMG, and EY all declared they would cut ties with their Russian partner firms, effectively cutting them off from the larger global network of consultancies.

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“Preventing Russia from accessing the United States’ valuable professional services increases the pressure on the Kremlin and cuts off its ability to evade sanctions imposed by the United States and our partners,” U.S. Treasury Secretary Janet Yellen said in a statement. “We are also targeting Putin’s ability to generate revenue that enables his aggression, as well as entities and their leaders who support his destructive actions.”

The newest round of sanctions now provide government enforcement of efforts to bar Russian clients from U.S. consultancies, where public backlash previously kept the firms motivated. Pushback from current and former employees drove McKinsey to backtrack on its previous decision to boycott Russian government clients but continue to work with the private sector mere days after announcing it.

The sanctions do leave some room for additional pressure to be applied, with U.S. legal services omitted from the most recent round of bans and financial actions focused on the executives of state-owned Gazprombank, but not the bank itself. By conducting a systematic and methodical removal of Russia from the global financial system, the U.S. government hopes to force President Putin into ceasing his invasion and withdrawing from Ukraine.