New restrictions for the Russian IT sector: what to expect?
On September 12, 2024, new sanctions and export restrictions imposed by the United States on Russia and Belarus will take effect. As part of these sanctions, a ban is expected on the supply of corporate and industrial software, the provision of IT consulting and design services, as well as the transfer of goods classified as EAR99 to Russia or within its territory.
More than 300 organizations and individuals connected to the Russian financial infrastructure and the circumvention of Western sanctions have been affected. New secondary sanctions could further push global banks to distance themselves from doing business with Russia. These measures are aimed at weakening Russia's ability to obtain essential goods, software, and services, as well as preventing attempts to circumvent sanctions through third countries.
Key Points of the Sanctions
The new OFAC rules prohibit the provision of IT consulting and design services, as well as support and cloud services for enterprise management software (EMS) and software for design and manufacturing.
Popular cloud services and development platforms, such as GitHub and Docker, may face shutdown risks. Their loss could lead to significant financial losses and disruptions in business processes, especially for those dependent on cloud solutions and foreign technologies.
OFAC is expanding its ability to impose sanctions on foreign banks that engage in large transactions or provide services to individuals under sanctions pursuant to Executive Order No. 14024. This could further push global banks out of the Russian market. Persons subject to U.S. jurisdiction are prohibited from engaging in any transactions with these entities.
Additional measures will be introduced to control the export of corporate and industrial software to Russia and Belarus. The list of controlled goods has also been expanded, and sanctions against Russia and Belarus have been consolidated into one section of the U.S. Export Administration Regulations (EAR).
What Businesses Should Do Now
Companies need to conduct an analysis of their information assets and services to identify vulnerable systems that may be affected by the new sanctions and develop a plan for their replacement.
In light of the new sanctions, Russian companies should accelerate the transition to russian software and IT solutions. This includes replacing not only enterprise management software but also information security tools, firewalls, and other components of IT infrastructure.
To ensure a successful transition to russian solutions, companies may seek assistance from experts who can help conduct an audit, select alternative solutions, and assess the level of security.
The new U.S. sanctions and export restrictions pose serious challenges for the Russian IT sector and businesses as a whole. However, timely preparation can significantly mitigate their negative impact. Companies should begin preparing for the new conditions now to minimize risks and ensure the stability of their business processes.