New US sanctions in the IT sector

On June 12, 2024, the U.S. Department of Finance and Commerce published a resolution that expands the list of sanctions against Russia. In particular, restrictions on the provision of services to the Russian IT sector will come into force on September 12, 2024.

The restrictions apply to

1) The provision of consulting services in the field of information technology and software development services;

2) IT support and cloud services in relation to enterprise management software and software for design and production.

The Office of Foreign Assets Control (OFAC) explains that the IT support services which are prohibited from being provided to Russian persons include the provision of technical expertise to solve customer problems related to the use of software.

Design services include software development and implementation, as well as related consulting assistance.

Cloud services include the delivery of software and related services over the Internet or the cloud, including using SaaS technologies.

The restrictions do not apply to

1) The provision of services to legal entities located in the Russian Federation that are directly or indirectly owned or controlled by persons from the United States;

2) The provision of services related to the closure or liquidation of a legal entity located in the Russian Federation, which is not directly or indirectly owned by or controlled by Russian entities;

3) The provision of services permitted by general licenses.

General license 25D is designed to mitigate the impact of new sanctions restrictions on Russian individuals. It allows the provision of services and software to Russian individuals related to the transmission of telecommunications and messaging over the Internet, such as instant messaging, chat and email, social networks, photo sharing, blogs, video conferences, electronic games, e-learning platforms, etc.

OFAC provides specific examples of actions that are subject to sanctions. For example, it is prohibited to sell subscriptions to Russian companies for cloud-based enterprise resource planning software; to provide services to Russian companies that experience technical difficulties in using software, for example, personnel management or automated design. In the field of software development, it is prohibited to provide services to Russian companies for the modernization of IT systems, the creation of new IT systems for them, and the adaptation of existing systems or apps for their implementation in a Russian company.

The provision of technical support to a Russian citizen who is experiencing difficulties in using, for example, a cloud service for working with tables or a free public videoconferencing system will not be sanctioned. In other words, if, for example, a Russian student encounters problems when working with Zoom, it is not prohibited to provide technical support to him. 

The provision of telecommunications services is also not subject to sanctions: providing Internet access, delegating domain names, providing access to free public services such as email and document management applications, and providing VPN services.

Thus, the sanctions against the IT sector are aimed at limiting the technological support of Russian companies, but minimizing damage to individuals, as well as “not taking away” access to popular free services such as e-mail and video conferencing systems.

Vera Zotova
Senior Associate, PhD in Law

+7 931 210 50 03
St. Petersburg

Olga Nechaeva
Junior Associate

+7 921 639 65 71
St. Petersburg