What is this about?
The UK has imposed additional sanctions on Russia. This article is a brief look at this development.
What is the UK sanctions regime?
The UK put legislation in place some time ago to be able to deal post-Brexit with sanctions under the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA 2018”). The different types of sanctions that can be imposed under SAMLA 2018 are essentially:
- Financial sanctions – measures designed to have an adverse financial impact on particular individuals or corporate entities;
- Trade sanctions – measures designed to disrupt various trade activities involving particular individuals, prescribed countries etc., including in connection with goods, technology, land, military activities, and/or services;
- Immigration sanctions – these are basically travel bans to neither enter nor remain in the UK; and,
- Aircraft and shipping sanctions – measures imposing restrictions on the movement of aircraft and ships.
There may be exceptions to the prohibitions or requirements made under SAMLA 2018, including granting licences.
In territorial terms SAMLA 2018 is enforceable against those within the UK and also UK individuals abroad. The Treasury’s Office for Financial Sanctions Implementation (OFSI) is the main agency that deals with financial sanctions enforcement issues, including issuing licences. Failure to comply with financial sanctions legislation or to seek to circumvent its provisions is a criminal offence.
The latitude under the UK sanctions regime is broader than the EU sanctions framework which allows for UK sanctions to operate more flexibly than their EU equivalents, so there may be divergences between the UK and EU sanctions regimes in some respects.
Following the recent adoption of the UK’s Economic Crime (Transparency & Enforcement) Act 2022 sanctions infringement has been made a strict liability regulatory offence, which should make it easier for the OFSI to take enforcement action.
What are the latest additional UK sanctions concerning Russia?
The UK already has a raft of various sanctions relating to Russia in place, notably with regard to the situation in Ukraine. The UK has now added 65 more sets of sanctions, where the focus is on key business individuals and entities, as well as targetting key industries supporting Russia’s invasion – the types of sanctions are mainly in the form of asset freezes in the UK (meaning that no UK citizen or company can do business with those sanctioned) and travel bans on individuals. Key recent additional sanctions that have been imposed, include against the following:
- Alfa-Bank JSC (Alfa-Bank), the largest of the private banks in Russia and is based in Moscow;
- Alrosa, the world’s largest diamond mining company specializing in exploration, mining, manufacture, and sale of diamonds;
- Eugene Markovich Shvidler, is a billionaire businessman with close business links to Roman Abramovich;
- Oleg Tinkov, founder of Tinkoff Bank;
- Herman Gref, CEO of Sberbank, the largest Russian bank;
- Oleg E. Aksyutin, Deputy Chairman of the Management Board at Gazprom PJSC, the Russian multinational energy corporation;
- Didier Casimiro, the First Vice President of Rosneft, the Russian State oil company;
- Zeljko Runje, the Deputy Chairman of the Management Board and First Vice President for Oil, Gas, and Offshore Business Development of Rosneft;
- Galina Danilchenko, installed as “mayor” of Melitopol (in Ukraine) by Russian authorities after their military occupied the city and kidnapped the legitimate mayor – this is the first designation for collaboration with the Russian military in Ukraine since the invasion; and,
- Polina Kovaleva, stepdaughter of Russian Foreign Minister, Sergey Lavrov.
It’s not known yet if there are further sanctions to come from the UK but this possibility can’t be ruled out, especially given that the UK has been sanctioning entities involved in the invasion.
With regard to sanctions in general, organisations should consider doing the following:
- Undertaking a rigorous due diligence screening against individuals and entities on sanctions lists;
- Checking whether any accounts are maintained or any funds or economic resources are held for sanctioned persons and entities;
- Freezing sanctioned accounts, and other funds or economic resources and any funds which are owned or controlled by sanctioned persons and entities, and refraining from dealing with the funds or assets or making them available (directly or indirectly) to sanctioned persons (unless licenses have been granted);
- Reporting any findings to the regulator and co-operating with any investigations that the regulator may undertake;
- Doing a contracts clauses check on relevant contracts to ensure that provisions concerning warranties, force majeure, termination, and, liability are all up to scratch as regards sanctions;
- Updating policies, procedures and risk assessments – be prepared to deal with sanctions breaches;
- Where possible and of use (either as an alternative or a complement to contract breach risk), considering obtaining insurance (export credit, political risk, and, trade disruption) against sanctions risks; and,
- Training staff on sanctions issues.
We spoke at a recent event about Russian sanctions, where we focused on sanctions policies & due diligence/screening issues: https://www.corderycompliance.com/rbcc-dit-russia-uk-02-dec/.
We report about sanctions issues here: https://www.corderycompliance.com/news/.
We have also written about the UK Economic Crime (Transparency & Enforcement) Act 2022 here https://www.corderycompliance.com/uk-ecte-act-sanctions-russia-belarus/.
For UK official guidance about the UK sanctions on Russian see here https://www.gov.uk/government/collections/uk-sanctions-on-russia and the UK sanctions list can be found here https://www.gov.uk/government/publications/the-uk-sanctions-list.
The UK Sanctions and Anti-Money Laundering Act 2018 can be found here https://www.legislation.gov.uk/ukpga/2018/13/contents/enacted.
For more information please contact André Bywater or Jonathan Armstrong who are lawyers with Cordery in London where their focus is on compliance issues.
|Jonathan Armstrong, Cordery, Lexis House, 30 Farringdon Street, London, EC4A 4HH||André Bywater, Cordery, Lexis House, 30 Farringdon Street, London, EC4A 4HH|
|Office: +44 (0)207 075 1784||Office: +44 (0)207 075 1785|