New Sanctions Against Russia and Belarus Impacting Nonprofits
On May 8, 2022, by the US Government, through the Office of Foreign Assets Control (OFAC), new sanctions against Russia and Belarus were announced. The new sanctions take effect on June 7, 2022, and prohibit any accounting, entity formation, or management consulting services to any Russian or Belarusian person or entity. The new sanctions also mean that nonprofits cannot assist anyone in a transaction with a Russian or Belarusian person or entity.
Legal counsel should be involved to help evaluate and confirm your nonprofit is adhering to these new sanctions. Though legal consultation can be expensive, the penalties and reputational damages that could be incurred could be more significant. The penalties for noncompliance are $330,000 per violation, or two times the value of the services rendered; whichever is greater. The OFAC plans to aggressively penalize those in violation of these sanctions, so it is important that nonprofits evaluate carefully and act now. Nonprofits should review their collaborations, projects, programs, and other interactions with their constituents, members, donors, and communities for the below situations.
• Do any of our clients, donors or related parties have any connection to Russia or Belarus?
• Are any of our clients, donors or related parties 50% or more controlled by a Russian or Belarusian person or entity?
• Are any of our clients, donors or related parties owned by offshore holding entities based in tax haven countries?
• Will any of our clients, donors or related parties engage in any transactions related to Russia or Belarussia?
• Do any of our clients, donors or related parties have Russian or Belarusian citizenship? (This includes seeking counsel if your client is a dual citizen)
The OFAC regulatory landscape may be complex and daunting. If your nonprofit is engaging, or considering engaging, in any international business, you should seek legal counsel to validate the transactions are not prohibited. Conducting business oversees requires due diligence, planning and consideration, and in some cases nonprofits may be required to obtain a license to supply foreign assistance legally. Even when the intent is to provide help through charitable means, failure to adhere to OFAC regulations can result in significant consequences and penalties.
This content was co-authored by Shannon Crowley, CLA Principal.
Comments are closed.