We are in it for the long haul, and Russia's invasion of Ukraine is far from over. Compliance departments need to start thinking about how to transition towards a long term approach to implementing Russia-related sanctions.
As the conflict approaches its fifth week, the Russo-Ukrainian war promises to be one of the most brutal and damaging wars since the turn of the century. Two large, well equipped armies have unleashed their firepower on one another, devastating Ukraine and causing widespread human suffering. City names grace our headlines and news reports so we can keep track of Russia’s assaults - Kharkiv, Mariupol, Irpin, Chernihiv – but these were vibrant communities who have been irreparably damaged by indiscriminate bombardment and military action.
The loss of life has been enormous, with thousands of soldiers and civilians killed and three million Ukrainians displaced. Yet the worst is still to come. Ukrainian troops have acted with both great courage and tactical precision to blunt Russia’s advance, and while this resistance has been heartening, it has also frustrated Vladimir Putin who has escalated the conflict by ordering the shelling and bombardment of civilian areas in Ukraine. Simply put, the worse the Russian military’s chances are, the more likely that Putin will commit further atrocities. Already, senior NATO officials fear that he may resort to chemical weapons next.
This is also not a war that Russian citizens called for. Thousands of ordinary Russians have been arrested for protesting this war of choice, and the Russian government has shut off many forms of social media including Facebook and Instagram. Sanctions have wrecked their economy and personal businesses, and no sensible person would have traded their fortunes for Putin’s dominion over Ukraine. They have also lost the little freedom they had left. Almost overnight, Russian citizens have gone from being denizens of an authoritarian regime that allowed a few outlets of dissent, to a totalitarian one that threatens jail time to anyone who even simply acknowledges that this conflict is indeed a war.
The financial crimes compliance community has responded admirably to Russian aggression by implementing the strongest set of sanctions ever levelled against a great power. But there is still much work to be done. We must begin thinking of how our compliance programs can transition from a reactive posture to one which is designed to implement a long-term program.
This advisory contains guidance on where your compliance program should be at this stage, how Russian sanctions targets may evade sanctions, and what steps to take next. We have also provided a series of quick reference guides to provide your compliance officers with detailed typologies and information on sanctions targets.