Client Alert: Recent UK Sanctions On Russia Developments| Cordery

What’s this about?

The UK sanctions regime concerning Russian individuals and entities with regard to the war in Ukraine has continued to develop; for more about how the UK sanctions regime works see the What is the UK sanctions regime? section of our article here https://www.corderycompliance.com/add65uksanctions/. This article sets out in brief the latest developments.

What are the most recent substantive and other developments concerning UK sanctions on Russia?

The most recent sanctions developments include the following:

On 25 April 2023 the UK’s Foreign, Commonwealth and Development Office updated official UK Russia sanctions guidance to reflect the provisions in the UK Sanctions on Russia Regulations 2023/440;
On 21 April 2023 the UK sanctioned five individuals (including FSB agents) connected to the poisoning and arrest of politician and journalist Vladimir Kara-Murza, under which all five individuals are subject to travel bans and asset freezes;
On 21 April 2023 the UK’s Office of Financial Sanctions Implementation published a Treasury Notice: three entries on the consolidated list were corrected, bringing the entries in line with the UK Sanctions List; and, one entry was amended and is still subject to an asset freeze;
On 14 April 2023 the UK’ Office of Financial Sanctions Implementation issued a General Licence which allows Russian Railways to pay Lithuanian Railways for Relevant Passenger Rail Travel, Lithuanian Railways to receive payments from Russian Railways for Relevant Passenger Rail Travel and a person (including a Relevant Institution) to carry out any activity reasonably necessary to effect the payment of Relevant Passenger Rail Travel;
On 13 April 2023 the UK’s Office of Financial Sanctions Implementation published a Treasury Notice: three entries on the consolidated list were corrected, bringing the entries in line with the UK Sanctions List; and, one entry was amended and is still subject to an asset freeze;
On 13 April 2023 the UK’s Foreign, Commonwealth and Development Office announced new UK sanctions targeting those who have knowingly assisted sanctioned Russian oligarchs, such as Roman Abramovich and Alisher Usmanov, to help hide their assets in complex financial networks. Individuals sanctioned include Demetris Loannides and Christodoulos Vassiliades. Loannides is reportedly responsible for hiding Abramovich’s £760m in assets prior to his sanction in 2022, while Vassiliades reportedly set up a series of trusts and offshore companies to protect Usmanov’s assets;
On 12 April 2023 the UK’s Office of Financial Sanctions Implementation published a Treasury Notice: fourteen entries on the consolidated list were added and are now subject to an asset freeze; and, one entry was amended and is still subject to an asset freeze;
On 11 April 2023 the UK’s Office of Financial Sanctions Implementation published guidance on the UK Maritime Services Ban and Oil Price Cap, which sets out the obligations imposed, exceptions and licencing, the UK’s Office of Financial Sanctions Implementation approach to implementation, and enforcement and reporting requirements;
On 6 April 2023 the UK’s Office of Financial Sanctions Implementation published a Treasury Notice: one entry on the consolidated list was corrected bringing the entry in line with the UK Sanctions List;
On 6 April 2023 the UK’s Office of Financial Sanctions Implementation published a (cyber) Treasury Notice: one entry on the consolidated list was corrected and is still subject to an asset freeze;
On 28 March 2023 the UK’s Office of Financial Sanctions Implementation issued a General Licence which allows for, subject to certain conditions, transactions related to bond amendments and restructurings for non-designated persons;
Under a Financial Sanctions Notice of 21 March 2023: one duplicate entry was removed from the consolidated list; the original entry remains on the consolidated list and the individual is subject to an asset freeze; and, one entry was amended and is still subject to an asset freeze;
Under a Financial Sanctions Notice of 21 March 2023: 1,730 entries were amended on the consolidated list to reflect designations made in respect of trust services sanctions;
On 21 March 2023 the UK’s Office of Financial Sanctions Implementation issued a General Licence which permits the wind down of Trust Services provided to designated persons otherwise prohibited under the UK’s Russian sanctions rules;
On 20 March 2023 the Office of Financial Sanctions Implementation and HM Treasury released updated guidance on the UK’s Russian sanctions rules adding a licencing ground for professional and business services for critical energy supply;
Under a Financial Sanctions Notice of 17 March 2023: one duplicate entry was removed from the consolidated list under the Russia regime following an update to the UK Sanctions List on 23 January 2023; the original entry remains subject to an asset freeze under the Belarus regime; one entry was removed and is no longer subject to an asset freeze; and, one entry was amended and is still subject to an asset freeze;
On 16 March 2023 the UK’s Office of Financial Sanctions Implementation updated its Enforcement and Monetary Penalty guidance to include details on how it assesses breaches of financial sanctions where an incorrect assessment of ownership and control of an entity is relevant to the breach committed;
Under a Financial Sanctions Notice of 10 March 2023: seven entries were amended on the consolidated list and are still subject to an asset freeze; and, fourteen entries were corrected and are still subject to an asset freeze;
Under a Financial Sanctions Notice of 28 February 2023: one entry was corrected on the consolidated list and is still subject to an asset freeze;
Under a Financial Sanctions Notice of 24 February 2023: ninety-two entries were corrected on the consolidated list and are now subject to an asset freeze; and, one entry was also amended and remains subject to an asset freeze;
On 24 February 2023 the UK government announced a new package of sanctions against Russia, including an export ban on every item Ukraine has found Russia using on the battlefield. Sanctions were also announced against: senior executives at Rosatom, a Russian state-owned nuclear power company; executives from Russia’s two largest defence companies; and, four banks and other senior figures involved in the military-industrial complex. The UK government also announced new major trade measures, including an import ban on one hundred and forty Russian goods, and the extension of existing measures against Crimea and territory in Donetsk and Luhansk oblasts that is not currently controlled by the Ukrainian government; and,
On 9 February 2023 the UK government (in coordinated action with the US Government) issued sanctions against seven Russian cyber criminals who had been found to be associated with the development or deployment of a range of ransomware strains which have targeted the UK (and the US).

Takeaways

With regard to sanctions in general, organisations should consider doing the following:

Undertaking a rigorous and thorough 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 licences 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.

Resources

We last wrote about sanctions here: https://www.corderycompliance.com/latest-uk-russia-sanctions-dev-0223/ and our other articles about sanctions can be found here: https://www.corderycompliance.com/category/sanctions/.

We spoke at an 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 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 Jonathan Armstrong or André Bywater 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
Jonathan.armstrong@corderycompliance.com		Andre.bywater@corderycompliance.com