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23 Feb 2024

U.S. Department of State

US authorities issue advisory on risks emerging from doing business in Russia & Russia-Occupied territories of Ukraine, call on conducting heightened HRDD

Risks and considerations for doing business in the Russian Federation and Russia-Occupied territories of Ukraine, 23 February 2024

The United States assesses that doing business in the Russia Federation and in Russia-occupied territories of Ukraine poses serious legal, financial, and reputational risks...Businesses increasingly risk severe civil and criminal penalties in navigating the raft of economic sanctions, export controls, and import restrictions imposed on Russia by the United States and its allies and partners. In addition, businesses are being forced to cooperate in Russia’s military mobilization and could be implicated in Russia’s commission of war crimes and crimes against humanity...The serious risks stemming from this operating environment may be mitigated by rigorous due diligence, though substantial risk is likely to remain.

The United States, along with its allies and partners, is aiding Ukraine in defending itself and imposing unprecedented sanctions to reduce the Government of Russia’s ability to carry out its illegal war. This includes sanctions on individuals and entities across the economy and government, including by designating financial institutions and sanctioning Russia’s sovereign wealth fund. Sanctions, export controls, and other economic measures such as the price cap on oil and petroleum products aim to reduce current and future revenue to the Government of Russia...While our sanctions are not intended to impact the people of Russia, these measures seek to impede the Russian government’s imports of components, technologies, and other inputs to and transactions with its defense sector, as well as to disrupt Russian sanctions evasion...

Although any decisions—including whether and how to continue operations, suspend commercial operations, or exit the Russian market, in accordance with applicable statutory and regulatory requirements—are ultimately up to businesses, individuals, and organizations, the U.S. government wants to highlight risks associated with doing business in or linked to the Russian Federation or the areas it occupies in Ukraine...

Businesses, individuals, financial institutions, and other persons—including investors, consultants, non-governmental organizations, and due diligence service providers that operate in or have value chains linked to the Russian Federation or the areas it occupies in Ukraine...face significant operational, legal, economic, and reputational risks associated with their Russian business operations and relationships. Conducting heightened due diligence can, in many cases, help to reduce or mitigate these risks and facilitate increased transparency to all stakeholders regarding such risks...

The specific categories of risks for businesses and individuals regarding Russia and its unlawful invasion and occupation of parts of Ukraine highlighted in this advisory are:

  1. Risk of businesses and individuals becoming exposed to sanctions, export controls, import prohibitions, money laundering vulnerabilities, and corruption; 
  2. Risk of businesses and individuals being implicated in the Government of Russia’s violations of international law, including war crimes and crimes against humanity, and human rights abuses; and 
  3. Risk to businesses and individuals due to the proliferation and implementation of repressive laws in the Russian Federation and the areas of Ukraine it occupies, including measures authorizing expropriation in certain instances or detentions based on spurious grounds.

In response to risks of this nature in the Russian Federation and the occupied regions of Ukraine, businesses and individuals are encouraged to conduct heightened due diligence, incorporating both a robust review of compliance mechanisms (compliance due diligence) and heightened human rights due diligence, as methods for limiting their exposure...