On 15 December 2022, the UK adopted the 17^th amendment (the "17^th Amendment") to the UK's sanctions against Russia, The Russia (Sanctions) (EU Exit) Regulations 2019 (the "UK Regulations"). The next day, the EU adopted the 9^th package of sanctions against Russia, which amended EU Regulation No 833/2014 ("EU Regulation 833"). Both amendments expanded the scope of their respective bans on professional and business services related to Russia.

In this article, we set out the new scope of the UK's ban on professional and business services contained in the 17^th Amendment, and compare it with EU Regulation 833. Our article on the UK's prohibition on the provision of trust services also contained in the 17^th Amendment can be found here.

Summary of the UK's ban on professional and business services

Previously, the UK's ban on professional and business services prohibited the direct or indirect provision of accounting, business and management consulting and public relations services to persons connected with Russia (UK Regulation 54C). The 17^th Amendment expands the scope of this prohibition to include the following additional services:

• auditing;
• advertising;
• architectural;
• engineering; and
• IT consultancy and design
  
  (the "UK's Business Services Ban").

There are the following exceptions, in overview:

Comparison with EU Regulation 833

Previously, the EU's ban on professional and business services prohibited the direct or indirect provision to the Russian Government or to legal persons, entities or bodies established in Russia of the following services:

• accounting;
• auditing;
• business and management consulting;
• public relations;
• architectural;
• engineering;
• legal advisory; and
• IT consultancy
  
  (Article 5n to EU Regulation 833).

The 9^th package of sanctions expands this prohibition to include advertising, market research and public opinion polling services, as well as product testing and technical inspection (the "EU's Business Services Ban").

The UK's and EU's ban on professional and business services are therefore now, in principle at least, somewhat aligned. However, there are differences:

1. As with the UK's new trust sanctions, the UK's Business Services Ban applies to services to "persons connected with Russia", whereas the EU's Business Services Ban applies to services to the Russian Government, or a Russian national/resident.
2. Unlike the EU, the UK's Business Services Ban does not currently apply to the provision of legal advisory services, market research, public opinion polling, product testing and technical inspection services.
3. The services which the UK's Business Services Ban relates to are defined in Schedule 3J to the UK Regulations. Save for the prohibited services that pre-dated the 17th Amendment (accounting, business and management consulting and public relations services – which definitions broadly mirror the EU's), the relevant services are defined by reference to particular Central Product Classifications.The equivalent definitions in EU Regulation 833do not refer to particular Central Product Classifications, and the language of those definitions, and therefore their scope, differ from the UK Regulations.
4. The EU provides for a specified wind-down period for each service, whereby the EU's Business Services Ban will not be breached if the relevant act was strictly necessary to terminate the service contract and the contract was entered into before a certain date (depending on the service in question). Save that for advertising, architectural, engineering services or IT consultancy and design services, and auditing services in respect of parent undertakings (as referred to in the above table), the UK does not provide for exceptions similar to the EU's wind-down periods.
5. In broad terms, there is no UK equivalent to the following exceptions to the EU's Business Services Ban:
   1. where the act in question is strictly necessary for legal proceedings or access to justice;
   2. where the Russian entity receiving the services is solely or jointly controlled by an entity incorporated/constituted in a Member State, the EEA, Switzerland, the USA, Japan, South Korea or the UK;
   3. where the services are necessary for public health emergencies, or prevention/mitigation of events likely to impact on human health and safety or the environment, or as a response to natural disasters; and
   4. where the services are necessary for software updates for non-military use and for non-military end-users.

If you would like advice on the implications of the latest sanctions to your business, please do get in touch with one of the sanctions team or your usual Stephenson Harwood contact.