Due distance – the new limb of due diligence
18 July 2022
Since the Russian invasion of Ukraine, the extent of Russian financial involvement and fund integration in the UK and Western Europe has been well publicised.
Last week for instance, the National Economic Crime Centre (NECC), a multi-agency unit in the National Crime Agency (NCA), and HMRC’s Office of Financial Sanctions Implementation (OFSI) have published a “red alert” on common techniques used by sanctioned Russian elites and their enablers to evade sanctions. The red alert should remind UK businesses of possible sanction evasion taking place by sanctioned Russian entities and the significant risks of working with any such entities (even if inadvertently). Sanction compliance procedures should therefore be taken very seriously.
However, in our experience, the desire of UK businesses to remain distant from Russian connections actually runs deeper than the sanctions provide. Business, ultimately, revolves around relationships. Those who have chosen relationships anywhere close to the Russian higher echelons (even if clear of official sanctions themselves) may not avoid the cynicism and sense of correctness of British business. In many ways, normal customer, supplier, investor or investment due diligence is already being complemented by an assessment of Russian due distance… ethical alignment and reputations come first after all!
How many of your customers, suppliers or even funders/investors have you considered in this way?
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Our Corporate Finance team are well versed in all things due diligence, typically on the finance and tax side, often in connection with business acquisitions or funding. Get in touch with the team below to find out more.
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