Davis Polk partners Paul Marquardt and Uzo Asonye and counsel Will Schisa and Margarita Clarens were quoted in Anti-Corruption Report from a recent firm webinar discussing some of this year’s key enforcement trends as well as policy and regulatory developments around U.S. sanctions against Russia.

The Davis Polk team provided an overview of the sweeping sanctions, export controls restrictions and other measures targeting Russia in response to the invasion of Ukraine. 

“Many companies effectively treat Russia as if it were under comprehensive territorial sanctions,” Will explained. “There are operational challenges for companies with operations in Russia. Even ordinary banking activities are hard now because of the sanctions on banks. De-risking efforts and the prevailing market conditions have put a chill on even permissible activities.”

Outside of the U.S., Paul noted that, in some ways, E.U. and U.K. measures go further by expanding restrictions on the export of certain services, including IT consultancy, certain legal advice, and architecture and engineering services.

In terms of compliance issues, Uzo discussed the new trend of compliance notes being issued jointly by the DOJ, the Office of Foreign Assets Control and the Bureau of Industry and Security. “The first of these tri-seal compliance notes, was published in March, and focused on various ways in which Russia and other bad actors have used third party intermediaries to evade sanctions,” Uzo said. “The note identified red flags that could indicate a third-party intermediary is attempting to evade sanctions or export controls.”

Effective compliance programs will need to adopt controls to minimize the risk of evasion and misuse by third-party intermediaries.

Margarita rounded out the webinar highlighting several cases of federal agencies enforcing rules against individual intermediaries of sanctioned persons and entities, who were found to be using complex schemes to facilitate transactions that evaded sanctions.

Measures Against Russia Pose Serious Compliance Challenges,” Anti-Corruption Report (September 27, 2023) (subscription required)