US Bans IT Services to Russia
Summary
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing a services determination issued pursuant to an April 6, 2022 Executive Order. The determination was previously issued on OFAC's website.
Compliance Requirements
- #1
The exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of IT consultancy and design services or of IT support services or cloud-based services for Covered Software to any person located in the Russian Federation.
Deadline: 2024-09-12(September 12, 2024 at 12:01 a.m. eastern daylight time)
Market Impacts
Prohibition on exportation, reexportation, sale, or supply of IT consultancy and design services, and IT support services and cloud-based services for enterprise management software and design and manufacturing software to any person located in the Russian Federation; Exclusion allows continued services to entities in Russia owned or controlled by US persons, and services for wind-down or divestiture of non-Russian owned entities; Exclusion for services related to software that is subject to EAR and authorized by Department of Commerce, or would be eligible for license exception if subject to EAR
Validated Company Impacts
BANCFIRST CORP /OK/
BancFirst operates as a commercial banking institution providing financial services, which has no overlap with the IT consultancy, design, support, or cloud-based services targeted by this sanctions rule. The company's business model focuses on banking operations and stock repurchases, not software exports or technology services to Russia. The company explicitly lists OFAC Sanctions Compliance as a top regulatory risk, directly aligning with this rule's prohibition on IT services exports to Russia. The rule addresses financial, legal, and reputational damages - the exact consequences the company identifies for sanctions violations, indicating strong risk factor overlap.
Freedom Holding Corp.
Freedom Holding Corp. operates primarily in financial services and telecommunications through its subsidiaries SilkNetCom and Elitecom, which do not align with the rule's focus on IT consultancy, design services, support services, or cloud-based services for enterprise/design software. There is no indication these segments export such services to Russia, resulting in minimal relevance. The rule's prohibition on IT services exports to Russia directly aligns with the company's Legal and Compliance Risk (regulatory sanctions) and Geopolitical Risk (international trade disruptions), both of which are explicitly identified in their risk profile. The requirement to comply with OFAC sanctions creates material regulatory exposure that matches their stated concerns about financial penalties and reputational damage.