Acting for Russian Citizens and Companies: A Practical Note for UK Lawyers

Outline guide — UK sanctions, professional conduct and related considerations

Prepared by Svetlova LLP — 7 July 2026. This is a working outline, not a substitute for a full sanctions risk assessment or specific advice on any transaction. The regime changes frequently — always check OFSI/OTSI’s current guidance and the Consolidated List before acting.

1. The core distinction: sanctioned vs. merely Russian

The most common misconception is that all dealings involving Russia or Russian nationals are prohibited. They are not. UK sanctions law draws sharp distinctions between:

• Designated Persons (“DPs”): individuals and entities specifically named on the UK Sanctions List. An asset freeze applies — their funds and economic resources are frozen, and it is prohibited to make funds or economic resources available to them, directly or indirectly (Regulation 11 and 17A, Russia (Sanctions) (EU Exit) Regulations 2019, “the Russia Regulations”).
• Persons connected with Russia: a much broader category (Regulation 21) — essentially anyone ordinarily resident or located in Russia, and any entity incorporated or domiciled there (including a Russian subsidiary of a UK company). This category is not subject to an asset freeze, but is the trigger for the professional and business services ban (Regulation 54C) and related restrictions.
• Everyone else — a Russian national who is neither a DP nor connected with Russia (e.g. resident and ordinarily based outside Russia) is not, by virtue of nationality alone, subject to sanctions restrictions. Nationality/ethnicity is not itself a basis for refusing to act — doing so risks unlawful discrimination under the Equality Act 2010 (see XTX Markets Technologies Ltd v Mazars LLP [2025], concerning de-banking of non-sanctioned individuals).

Always check the actual and current UK Sanctions List (the single official list, OFSI’s Consolidated List having been folded into it) before assuming anything about a client or counterparty’s status.

2. What is absolutely prohibited (asset freeze — Designated Persons)

• Making funds or economic resources available, directly or indirectly, to or for the benefit of a DP (Regulation 11/17A).
• This is strict liability civilly — OFSI can impose a monetary penalty even without knowledge, though actual/constructive knowledge and the standard expected of a regulated professional are aggravating or mitigating factors.
• Criminal liability attaches where there is knowledge or reasonable cause to suspect a breach.
• “Economic resources” is interpreted broadly — it can include intangible assets and services, not just cash (OFSI has taken enforcement action on this basis).
• A UK legal firm can act for a DP and be paid, but only within the terms of OFSI’s Legal Services General Licence (currently INT/2026/9512597, effective 29 April 2026 to 28 October 2026 — check for a successor licence if outside that window), which caps hourly rates and fee levels and requires reporting to OFSI.

3. Professional and business services ban (Regulation 54C)

Since 21 July 2022 (extended through 2022), it has been prohibited to provide, directly or indirectly, the following services to a person connected with Russia: accounting, advertising, architectural, auditing, business and management consulting, construction, engineering, IT consultancy and design, and public relations services (Schedule 3J).

Legal advisory services are not included in this list — they are governed by a separate, narrower regime (Regulation 54D, below). This is a frequent point of confusion.

Limited exceptions exist, including services provided to discharge a UK statutory/regulatory obligation not arising under contract, and certain pre-existing contracts (time-limited wind-down provisions, now expired for most categories).

4. The specific legal advisory services restriction (Regulation 54D)

Since 30 June 2023 (amended 6 September 2024), it is prohibited for a UK person, anywhere in the world, to provide legal advisory services to a non-UK person where the UK person knows the object or effect of the services is to enable or facilitate activity that would be prohibited under the Russia Regulations if it had the necessary UK links.

4.1 What counts as “legal advisory services” for this restriction

• Non-contentious advice on the application or interpretation of law.
• Acting on behalf of a client, or advising, in connection with a commercial transaction, negotiation, or other third-party dealing.
• Preparation, execution or verification of legal documents.

4.2 What is expressly carved out — and remains lawful

• Litigation and arbitration: representation or advice in proceedings before courts, arbitral tribunals or administrative agencies in any jurisdiction is not “legal advisory services” for these purposes. Acting for a Russian party (or a party connected with Russia) in contentious proceedings is not, of itself, restricted by Regulation 54D.
• Sanctions and compliance advice — advising on the Russia Regulations, other UK or non-UK sanctions, Russian counter-sanctions, or other criminal/compliance legislation (Regulation 60DB).
• Diplomatic/consular matters.
• (Re)insurance claims management.

The 2024 amendment added a knowledge requirement — the offence now requires the adviser to know the object or effect is to enable/facilitate prohibited activity, narrowing the earlier, broader “in relation to or in connection with” formulation.

5. Circumvention and facilitation (Regulations 19 and 55)

Separately from 54C/54D, it is an offence to intentionally participate in activities knowing their object or effect is, directly or indirectly, to circumvent any prohibition in the Russia Regulations, or to enable/facilitate a contravention. This is a general anti-avoidance provision that can catch legal (and other) services even outside the specific 54C/54D categories, if the underlying transaction being assisted is itself prohibited.

6. Worked example: can a UK company sell shares in its Russian subsidiary at nominal value simply to exit?

In principle, yes — exiting Russia (as opposed to investing into Russia) is generally the direction sanctions law does not restrict. But “nominal value, no sanctions involved” requires unpacking across several distinct checks, not one:

6.1 Check the counterparty

• Is the buyer, or anyone who ultimately owns or controls the buyer, a Designated Person? If so, selling an asset at an undervalue is capable of being characterised as making an economic resource available to that DP (i.e. the value transferred exceeds the price paid) — squarely within the asset freeze prohibition, regardless of how the transaction is documented.
• This is the single most important check, and the one most often missed in a rushed exit — ownership and control structures in Russia are frequently opaque, and the Court of Appeal’s decision in NBT v Mints [2023] EWCA Civ 1132 confirms that “control” for sanctions purposes can be found on a fact-specific basis even absent formal majority ownership.

6.2 Check Regulation 20 (dealing in transferable securities/money-market instruments)

• Regulation 20 restricts dealing in transferable securities and money-market instruments issued by, or on behalf of, certain Russian persons/entities, but this is principally targeted at capital markets instruments (bonds, listed securities) issued after specified dates, and at the Russian state and major state-linked entities — it is not a general prohibition on selling shares in an ordinary private Russian subsidiary. It should nonetheless be checked against the specific entity and instrument in question before assuming it is out of scope.

6.3 Check for circumvention/facilitation

• If the nominal-value structure exists to disguise value passing to a DP, or to achieve indirectly what regulation 17A/11 would prohibit directly, this is a circumvention risk under Regulation 19/55 — independent of Regulation 20.

6.4 Russian counter-sanctions — a separate, non-UK regime that will govern the deal mechanics

• Presidential Decree No. 618 (and related Russian domestic legislation) imposes its own requirements on the Russian side for a divestment by a person from an “unfriendly” state: mandatory approval of a Russian Government Commission, a mandatory minimum discount to market value (historically around 50%, subject to change), and often an “exit contribution” payment to the Russian federal budget calculated as a percentage of the transaction value.
• This is Russian law, not a UK sanctions constraint — but it directly shapes why a nominal or heavily discounted price might be commercially unavoidable, and needs to be factored into the UK-side analysis (including on valuation and tax, below) rather than treated as a red flag in isolation.

6.5 UK company law and tax consequences (not sanctions, but frequently overlooked)

• Selling a company asset for nominal value engages ordinary UK director’s duties — principally the duty to promote the success of the company (Companies Act 2006, s.172) and to exercise reasonable care and skill (s.174). Directors should document the commercial rationale (including the Russian counter-sanctions constraints above) to justify why nominal consideration was the best reasonably available outcome, to protect against a future minority shareholder or liquidator challenge.
• For UK tax purposes, a disposal to a connected party is generally treated as being at market value regardless of the price actually paid (TCGA 1992, s.18/s.17, and equivalent corporation tax principles) — a nominal sale price does not achieve a nominal tax base cost or avoid a deemed market value gain/loss calculation. Specialist tax advice should run in parallel.

6.6 Practical conclusion on the example

A UK company can lawfully sell shares in a non-sanctioned Russian subsidiary, including at nominal value, without breaching UK sanctions, provided: the buyer is not a DP and not owned/controlled by one; the shares/instrument are not caught by Regulation 20; the structure is not designed to circumvent any prohibition; and the firm advising is not thereby providing prohibited legal advisory services to a non-UK person in relation to other restricted activity. The transaction will separately need to satisfy Russian counter-sanctions requirements (Decree 618 and related legislation) on the Russian side, and UK director’s duties and tax analysis on the UK side — none of which are “sanctions” issues but all of which will drive the real structure and price of the deal.

7. SRA / professional conduct obligations

• Firms must conduct a sanctions risk assessment for relevant clients and matters, and are expected to apply risk-based due diligence proportionate to their exposure (SRA guidance, drawing on OFSI’s risk indicators).
• The SRA has published “red flags” for attempted circumvention — e.g. unusual corporate structures, reluctance to disclose beneficial ownership, last-minute changes to payee details, and transactions that make commercial sense only if a sanctions prohibition is being avoided.
• Firms holding funds connected to designated persons, or who know/suspect a breach, are subject to reporting obligations to OFSI (and, where relevant, the NCA under POCA/AML legislation) — this can override the normal duty of confidentiality.
• Client and other professional privilege is not overridden by sanctions reporting obligations in the same way as under POCA disclosure requirements — the two regimes should be considered separately and carefully for any given piece of information.

8. Quick reference — what is and isn’t restricted

• Acting for a non-designated Russian national resident outside Russia: generally unrestricted (subject to ordinary conduct/AML checks).
• Litigation/arbitration for a Russian party or entity: not restricted by 54D, even where the counterparty or matter has Russian connections — always check the client/counterparty is not a DP for other reasons (asset freeze, payment mechanics).
• Non-contentious commercial/transactional advice to a person connected with Russia, on activity that would itself be prohibited if UK-linked: restricted under 54D.
• Advice on sanctions compliance itself, to anyone: permitted (Regulation 60DB).
• Receiving fees from a Designated Person: only within the current OFSI Legal Services General Licence.
• Selling/exiting non-sanctioned Russian assets: generally permitted, subject to the counterparty, securities-dealing, and circumvention checks set out in Section 6.
• New investment into Russia, or dealing in newly issued Russian securities: separately and more heavily restricted — not covered in detail in this note; take specific advice.

9. Sources and further reading

• Russia (Sanctions) (EU Exit) Regulations 2019, as amended — in particular Regulations 11, 17A, 19–21, 54C, 54D, 55, 60DB, and Schedule 3J.
• OFSI, “Russia sanctions: statutory guidance” (gov.uk, last updated 20 May 2026).
• OFSI/DBT, “Complying with professional and business services sanctions related to Russia” (gov.uk).
• SRA, “Sanctions: Legal services” guidance (sra.org.uk).
• NBT v Mints [2023] EWCA Civ 1132 (ownership and control test).
• Current OFSI Legal Services General Licence — check gov.uk/government/publications/legal-services-general-licence for the version currently in force.

This note reflects the position as understood as at 7 July 2026. The Russia sanctions regime changes frequently (OFSI reported 240 active enforcement investigations as at April 2025, and continues to issue and amend general licences on a rolling basis) — always verify the current position before relying on any point above in a live transaction.