International Pharma Can Now Use U.S.-based Accountants in Russia
The pharma industry was unhappy about a rule which prevented U.S. accountants and consultants, and even some in-house staff at pharma companies, from providing services to medical services companies in Russia. Carys Golesworthy explains how this has now changed.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has long been vocal about the fact that sanctions on Russia are not meant to disrupt or prevent the provision of medicines or medical devices to persons in Russia. However, until recently the licenses issued by OFAC authorized otherwise prohibited business dealings relating to the provision of medicines and medical devices in Russia only when they involved certain sanctioned persons. OFAC did not authorize the provision of sanctioned services – management consulting services, trust and corporate formation services, and accounting services – to entities in Russia, even if those entities were medical companies.
These prohibitions caused problems for pharma companies whose accountants were not authorized to deal with their Russian operations. If the pharma companies were not ultimately owned by U.S. persons, the sanctions restrictions prevented even in-house U.S. accountants or employees from providing any accounting or consulting services to Russian businesses or to their Russian colleagues.
On January 17, OFAC responded to these pharma industry concerns by issuing a revised version of General License 6C, its general license related to the provision of, inter alia, medicine and medical devices in Russia. The new version appears to now authorize U.S. persons to provide otherwise prohibited services – management consulting services, trust and corporate formation services, and accounting services -related to the provision of medicines and medical devices in Russia. This authorization will only apply in cases where there were not any other prohibitions relating to these services, separately to OFAC’s previous prohibition.
Some in the life sciences industry may say that this revision does not go far enough, because it lifts the prohibition on services where such services relate to the provision of medicines and medical devices in Russia, but does not authorize business dealings relating to the provision of medicines and medical devices in Russia which might involve a “new investment” in Russia. However, the revisions do represent an important step toward authorizing an increasing number of business activities in relation to the provision of medicines and medical devices in Russia.
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