Sanctions – A New World?
The UK has a new sanctions regime. What does this mean in practice?
Prior to the UK's departure from the EU, and the end of the transition period on 31 December 2020, the UK's sanctions regime was primarily derived from EU law. When sanctions were imposed by the EU, the regulations implementing them took direct effect in the UK.
Now that the UK is no longer part of the EU – with the result that EU regulations no longer take direct effect in the UK – the UK has implemented its own sanctions regime. The cornerstone of this is the Sanctions and Money Laundering Act 2018 (SAMLA).
SAMLA empowers ministers to impose a variety of sanctions, falling into broad categories:
- Financial sanctions – such as asset freezing orders, orders preventing financial services or funds from being provided to or from sanctions targets, and proscribing ownership interests in sanctions targets;
- Immigration sanctions, applying restrictions under UK immigration law;
- Trade sanctions – the broadest category, preventing, amongst other things, the import/export of goods with origins in, or destined for, designated countries or with connections to sanctions targets; preventing technologies from being made available, and preventing services from being provided by or to sanctions targets;
- Aircraft and shipping sanctions, detaining or controlling the movement of designated vessels / vessels owned by designated people, and preventing the ownership/operation/registration of vessels owned by or chartered to designated persons, and
- 'Other' sanctions for the purposes of UN obligations – this is a 'sweeper' provision and it enables the relevant minister to impose such sanctions as he/she considers appropriate for the purposes of compliance with a UN obligation.
These sanctions can be imposed by reference to designated persons, persons connected with a prescribed country, or of a prescribed description and connected with a prescribed country.
Plus ça change
In practice, despite the implementation of a 'new regime', there is a striking similarity between the list of individuals subject to sanctions by the UK and those subject to sanctions under the EU regime. In its press release introducing the new UK regime, the government noted that 113 entries previously subject to sanctions under the EU-derived regime would no longer be subject to asset freezes under UK legislation, and a handful of UN listings, although still subject to a travel ban, would no longer be subject to financial sanctions. However, in the context of a UK sanctions list that is 564 A4 pages long, this is very much a case of tinkering and minor adjustments rather than wholesale change. Time will tell whether the UK's sanctions targets diverge further from the EU's list – but for now, it is very much a case of business as usual.
Sanctions in practiceDespite the large degree of similarity between the UK and EU sanctions lists, it is still going to be necessary for businesses based in, or that deal with the UK, to consider the UK sanctions regime in developing their business plans. This adds to the existing load of sanctions regimes to consider – a prudent business will already have been bearing in mind the effect of (at least) the US, EU and UN sanctions regimes, as well as any local sanctions regimes that relate to jurisdictions in which, or with which, they plan to do business. Given the scale of the financial penalties that can apply for sanctions breaches (in February 2020, the UK imposed a penalty in excess of £20m– and that is after a reduction of 30% for voluntary disclosure – on a bank for sanctions breaches) it is worth taking the time to guard against falling foul of sanctions regimes.