UK Sanctions

Introduction

The United Kingdom’s (UK) sanctions regime to date has been predominantly influenced by United Nations (UN) and European Union (EU) sanctions. As a member of the UN, the UK is required to implement UN Security Council Resolutions into national law. EU sanctions legislation (by which the UK will continue to be bound until the end of the Brexit transition period, i.e., at least until the end of 2020) usually applies automatically in the UK, although domestic legislation is typically required in relation to certain aspects of the EU sanctions regime, such as enforcement.

In addition to implementing sanctions originating from the UN or the EU, the UK has its own autonomous sanctions regime under which it can impose its own restrictive measures on entities and individuals. Once the UK is no longer bound by EU law at the end of the Brexit transition period, these autonomous sanctions powers will assume a greater importance.

The UK Parliament has now passed the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) to provide the legislative framework for the UK’s post-Brexit sanctions regime, which will enable the UK to enhance its own sanctions regime, separate from Europe, and to comply with its international obligations.

In this chapter we look at how sanctions have been and continue to be implemented, applied and enforced in the UK, including during the Brexit transition period. We then examine the likely shape of the post-Brexit sanctions regime under SAMLA.

It is not yet clear to what extent UK sanctions policy will diverge after Brexit from the EU Common Foreign and Security Policy. The UK has been a comparatively active EU Member State with respect to the formulation and adoption of sanctions by the EU, and sanctions will continue to be a key tool in the UK’s foreign policy in the future. However, the degree of similarity between UK and EU sanctions will depend upon the future alignment of their respective foreign policies. In any event, the UK’s departure from the EU means that there is an additional sanctions regime for multinational companies to comply with. A company that does business in the UK and the EU after the Brexit transition period will be subject to at least two separate sanctions regimes, in addition to any others that already apply to it, such as the US regime.

The current regime

Sources of UK sanctions

As explained above, the UK has historically followed the UN and the EU in terms of substantive sanctions measures. UN Security Council Resolutions encompass a range of measures, from economic and trade embargoes, to the freezing of funds and travel bans on individuals. The Security Council has established 30 sanctions regimes since 1966, of which 14 are still operational.[2]

In addition to enacting autonomous sanctions of its own, the EU implements all sanctions imposed by the UN. The UK’s compliance with UN resolutions is achieved through its implementation of EU sanctions legislation.[3] Following the end of the Brexit transition period, the UK will continue to be required to implement UN sanctions, which it will do through its autonomous powers under SAMLA.

Most EU sanctions legislation has been directly effective in the UK by virtue of being enacted in EU Regulations. This means the EU legislation does not require domestic legislation to have legal force in Member States. However, certain aspects of the EU sanctions regime do require subordinate legislation in Member States. For example, EU sanctions regulations typically require Member States to set penalties for infringement of their provisions.[4] In the UK, this is done by way of statutory instruments providing for the administration of EU sanctions and their criminal and civil enforcement by the relevant UK authorities.[5] UK statutory instruments also typically contain reporting obligations on certain sectors. Enforcement and reporting obligations are covered in more detail below, at ‘Reporting obligations and investigative powers’, and in Chapter 5.

The UK’s autonomous sanctions powers have historically been more limited. Before the significant expansion in scope brought about by SAMLA, the UK’s powers were principally derived from the Terrorist Asset-Freezing etc. Act 2010, the Counter-Terrorism Act 2008 and the Anti-Terrorism, Crime and Security Act 2001.

Territorial extent and application of UK sanctions

As explained above, UK sanctions regulations are principally derived from EU legislation, which typically require Member States to establish their own enforcement regimes for EU sanctions. When this is the case, the UK regulations that create the corresponding criminal offence will automatically apply within the territory and territorial waters of the UK, but often also have a degree of extraterritorial effect. UK financial sanctions regulations typically extend to conduct occurring wholly or partly outside the UK if that conduct is committed by a UK national or by a body incorporated or constituted under UK law.[6] The same applies in relation to export controls, under which conduct committed by a UK national or company (or a person acting under the control of a UK national or company) is capable of amounting to an offence under UK law.[7]

The Office of Financial Sanctions Implementation (OFSI) has published guidance on its enforcement of financial sanctions (the OFSI Enforcement Guidance).[8] This document includes guidance on OFSI’s approach to jurisdictional issues. OFSI considers that ‘a UK nexus might be created by such things as a UK company working overseas, transactions using clearing services in the UK, actions by a local subsidiary of a UK company (depending on the governance), action taking place overseas but directed from within the UK, or financial products or insurance bought on UK markets but held or used overseas’. The guidance states that this list is not intended to be exhaustive or definitive.[9]

Types of sanctions

Financial sanctions

Financial sanctions fall into a number of different categories. If an individual or entity is designated under EU sanctions, the effect is typically to impose an ‘asset freeze’, which requires those subject to the legislation to freeze any funds or economic resources belonging to (or owned, held or controlled by) the designated entity, and prohibits them from making funds or economic resources available (directly or indirectly) to or for the benefit of the designated entity. Designated individuals may also be made subject to immigration sanctions in the form of travel bans, meaning that they will be refused leave to enter or to remain in the UK. In addition to asset freezes, financial sanctions may impose investment bans, restrictions on access to capital markets, directions to cease banking relationships and activities, requirements to notify or seek authorisation prior to certain payments being made or received, and restrictions on the provision of financial, insurance, brokering or advisory services or other financial assistance in connection with trade. (See also Chapter 2.) Of these, the restrictions on access to capital markets are particularly significant. These are covered in Chapter 2, at ‘Country-specific sanctions regimes’ and ‘Sectoral trade and investment restrictions’.[10]

OFSI has published general guidance on financial sanctions (the OFSI Guidance), in which it confirms that it ‘interprets prohibitions widely, which is in keeping with the way in which the EU courts and other member states approach them’.[11] In the context of asset freezes, the OFSI Guidance stipulates that funds and economic resources are to be frozen immediately by the person in possession or control of them. In practice this means that this person may not deal with the funds or economic resources in any way, for example by returning them to the designated entity, selling them, investing them, and so on. The freezing of funds or economic resources does not involve a change in their ownership, nor are they confiscated or transferred to OFSI for safekeeping. The obligation to freeze is generally accompanied by a prohibition on making any funds or economic resources available to or for the benefit of the designated entity.[12]

The obligation to freeze funds arises when a person knows or has ‘reasonable cause to suspect’ that the funds or economic resources belong to (or are owned, held or controlled by) a designated entity. The prohibition on making funds or economic resources available to a designated entity arises where a person knows or has ‘reasonable cause to suspect’ that he or she is making the funds or economic resources available. According to the OFSI Guidance, ‘reasonable cause to suspect refers to an objective test that asks whether there were factual circumstances from which an honest and reasonable person should have inferred knowledge or formed the suspicion’.[13] Failure to comply with the prohibitions set out in the relevant regulations can amount to a criminal offence (see Chapter 5 of this guide).

Both ‘funds’ and ‘economic resources’ are defined concepts within EU sanctions legislation, and these definitions are adopted in corresponding UK financial sanctions regulations. OFSI interprets the phrase ‘funds and economic resources’ broadly. ‘Funds’ generally means ‘financial assets and benefits of every kind’, including but not limited to cash, cheques, claims on money, drafts, money orders and other payment instruments, deposits with financial institutions or other entities, balances on accounts, debts, debt obligations, publicly and privately traded securities and debt instruments (including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures and derivatives contracts), interest, dividends or other income on or value accruing from or generated by assets, credit, right of set-off, guarantees, performance bonds or other financial commitments, letters of credit, bills of lading, bills of sale and documents showing evidence of an interest in funds or financial resources. ‘Economic resources’ generally means ‘assets of every kind – tangible or intangible, movable or immovable – which are not funds, but may be used to obtain funds, goods or services’. This includes but is not limited to precious metals or stones, antiques, vehicles and property. OFSI considers these definitions to extend to crypto assets.[14]

Similarly, the word ‘dealing’ is widely interpreted in the OFSI Guidance. With respect to funds, it generally means ‘moving, transferring, altering, using, accessing, or otherwise dealing with them in any way which would result in any change to their volume, amount, location, ownership, possession, character, destination or other change that would enable the funds to be used, including portfolio management’. With respect to economic resources, it generally means ‘using the economic resources to obtain funds, goods, or services in any way, including, but not limited to, by selling, hiring or mortgaging them. The everyday use by a designated person of their own economic resources for personal consumption is not prohibited’.[15]

Trade sanctions

Trade sanctions are controls on (1) imports, exports and movements of certain goods and technology and (2) the provision and supply of certain services. They include restrictions on the supply of arms (as well as associated technical assistance and training), on exports of equipment that may be used for internal repression, and on imports of certain goods from specified countries. In some cases, an embargo may be imposed on trade with another country. In other cases, economically significant sectors of a country’s industry are targeted.

By way of example, under the Export Control Act 2002 and the Export Control Order 2008, the UK prohibits or places controls on exports of military and dual-use items (goods that have both a civil and military use) to an extensive list of countries. This legislation contains a Military List, comprising items that will generally be confined to the defence sector, and a Dual-Use List, which affects a wider range of sectors, including aviation, telecommunications and petrochemicals.[16] The Export Control Order 2008 imports into UK law the EU Dual Use Regulation.[17]

Both financial and trade sanctions usually contain an ancillary prohibition (i.e., a criminal offence) on conduct intended to circumvent the principal prohibitions of the legislation. The OFSI Guidance provides examples of behaviour that may amount to circumvention. Financial sanctions also usually allow Member States to grant licences to individuals and companies to engage in conduct that would otherwise amount to a breach of the relevant prohibitions.

UK sanctions bodies and authorities

A number of different entities share responsibility for formulating sanctions policy and implementing, administering and enforcing sanctions legislation in the UK. The Foreign and Commonwealth Office (FCO) is responsible for overall UK government policy on international sanctions. Through the UK’s Mission to the UN in New York and its Permanent Representation to the EU, the FCO contributes to the design and negotiation of sanctions regimes and designations.[18]

Financial sanctions are administered and implemented by HM Treasury, and specifically by OFSI, which was established in 2016 to ‘provide a high-quality service to the private sector, working closely with law enforcement to help ensure that financial sanctions are properly understood, implemented and enforced’.[19] OFSI deals with applications for financial sanctions licences and any necessary notifications and authorisations, and has the power to impose monetary penalties for breaches of EU financial sanctions.[20] Travel bans are administered by the Home Office.[21]

Trade sanctions and embargoes are administered and implemented by the Department for International Trade, which (through the Export Control Joint Unit (ECJU)) regulates the UK’s export control regime, under which an export licence is required to export certain products and technology from the country. The ECJU administers the UK’s system of export controls and licensing for military and dual-use items, as well as other trade sanctions. It ‘brings together operational and policy expertise from the Department for International Trade, [FCO], and the Ministry of Defence’.[22] HM Revenue and Customs has powers to enforce breaches of trade sanctions.[23]

Other agencies, such as the National Crime Agency, the Serious Fraud Office and the police, may also investigate and bring enforcement action in respect of sanctions breaches.

Designated persons

As explained above, an entity may be sanctioned either through designation under an asset freeze regime or as a result of some other form of sanctions legislation, such as a restriction on assisting an entity to gain access to capital markets. OFSI maintains two lists of those subject to financial sanctions, one covering asset freeze designations (the Consolidated List) and the other covering entities subject to capital market restrictions under the Russian sanctions regime (the Capital Markets List).

The Consolidated List contains the names and other identifying information of all individuals and entities designated under UN, EU and UK asset freeze regimes. OFSI publishes the Consolidated List to help businesses and individuals comply with financial sanctions. OFSI seeks to update the List within one working day for all new UN, EU and UK listings coming into force in the UK, and within three working days for all other amendments.[24]

The Consolidated List contains a range of information to aid the identification of designated entities. The OFSI Guidance explains that, for individuals, this can include their alias, date of birth, passport details, nationality, last known address, and employment or role. OFSI will deal with queries if there is uncertainty as to whether a counterparty (for example) is indeed the entity shown in the Consolidated List.

The Capital Markets List is a separate list of entities subject to specific capital market restrictions under the Russian sanctions regime. These entities are not contained on the Consolidated List as they are not subject to asset freeze sanctions.[25]

Ownership and control by designated persons

Asset freezes extend to all funds and economic resources belonging to, owned, held or controlled by designated persons. This will include funds and economic resources relating to legal entities that are owned or controlled by a designated person. These additional entities may not appear on the Consolidated List in their own right, but it may still be an offence (for example) to make funds or economic resources available to them.

OFSI adopts EU guidance on ownership and control, as explained in Section 4 of the OFSI Guidance.[26] As regards ownership, the OFSI Guidance indicates that the key criterion is the possession of more than 50 per cent of the proprietary rights. If this criterion is met, and the owner is also a designated person, then financial sanctions will also apply to the entity that is owned by the designated person.[27] OFSI interprets ‘owned’ as including both direct and indirect ownership: ‘If the ultimate beneficial ownership of an entity rests with a designated person (for example, they own a corporate body that owns another corporate body), OFSI takes the view that all entities that are part of the ownership chain are subject to financial sanctions.’[28]

If a designated person or entity has a minority (as opposed to a majority) interest in another entity, such that the ownership criterion is not met, the question will be whether the designated person or entity exercises a sufficient degree of control (as explained below). In addition, anyone dealing with an entity in which a designated person or entity has a minority interest should take note of any change in the level of ownership in case it exceeds 50 per cent.[29]

With respect to control by a designated person or entity, OFSI considers that the satisfaction of at least one of the following criteria is sufficient to establish control:

  • a right or power to appoint or remove a majority of the members of the administrative, management or supervisory body of an entity;
  • having appointed solely as a result of the exercise of voting rights a majority of the members of the administrative, management or supervisory bodies of an entity (who have held office during the present and previous financial year);
  • controlling alone, pursuant to an agreement with other shareholders in or members of an entity, a majority of shareholders’ or members’ voting rights in that entity;
  • having the right to exercise a dominant influence over an entity, pursuant to an agreement entered into with that entity, or to a provision in its memorandum or articles of association, where the law governing that entity permits it to be subject to that agreement or provision; or
  • having the power to exercise the right to exercise a dominant influence referred to in the previous point, without being the holder of that right (including by means of a front company).[30]

In practice, the level of due diligence conducted by a company with a view to questions of ownership and control is likely to vary depending on its sector. Companies that are subject to due diligence requirements under anti-money laundering and terrorist financing regulations are likely to have in place procedures designed to identify, for example, the presence of a designated person in a company’s ownership structure. Companies that fall outside the scope of this legislation may well not have these types of procedures in place, although they are still subject to sanctions legislation, and will commit an offence if they deal with a designated person when they know, or have reasonable cause to suspect, that they are dealing with such a person.

The EU’s capital markets restrictions contain provisions within the legislation itself that deal with ownership and control. They extend to (1) legal persons, entities or bodies established outside the EU that are more than 50 per cent owned (directly or indirectly) by entities subject to capital market restrictions, and (2) legal persons, entities or bodies acting on behalf or at the direction of entities that are subject to capital market restrictions (or of an entity falling within point (1), above).[31]

The designation process

The majority of individuals and entities appearing on the Consolidated List will have been designated under UN and EU sanctions regimes. As explained above, however, the UK has autonomous designation powers. Before the passing of SAMLA, these have been principally derived from the Terrorist Asset-Freezing etc. Act 2010. Under this statute,[32] the UK government has the power to designate individuals and entities when (1) it has a reasonable belief that they are involved in terrorist activities (or that they are owned or controlled by a person involved in terrorist activities), and (2) it considers that restrictions are necessary to protect the public.

Notification under this legislation requires written notice to be given to the designated entity, and the notification must be publicised generally (with exceptions for individuals under the age of 18, and where national security interests mean that disclosure of the notification should be restricted). Notifications are time limited, for example for 12 months, subject to renewal.

If a UK person or company is designated under EU sanctions, that party would need to challenge such a designation at EU level (see Chapter 2, at ‘Designations and delistings’). A successful challenge would be reflected in the relevant UK sanctions lists. Persons designated under the UK’s autonomous sanctions are able to appeal to the High Court against a designation decision. Third parties are also able to apply to the High Court to set aside any designation decision affecting them.[33]

Licensing

Sanctions legislation typically provides for certain exceptions from the prohibitions and restrictions imposed by the legislation. These exceptions may take the form of exempt activities (i.e., conduct that is expressly permitted by the sanctions legislation in question without the need for any licence or authorisation). Sanctions legislation may also provide for licences (sometimes referred to as authorisations) to be granted to permit conduct that would otherwise be in breach of a prohibition. In addition, EU sanctions legislation may require a Member State to notify other Member States of the grounds on which it proposes to grant authorisations.

Licensing, authorisation and notification requirements provided for under EU sanctions legislation are administered by the relevant authorities of Member States. In the UK, the relevant authorities are the same for both autonomous and UN or EU sanctions. OFSI deals with licensing decisions in connection with financial sanctions, while the Department for International Trade (through the ECJU) deals with applications in the context of trade sanctions.

The OFSI Guidance makes it clear that licences will be issued only where there are specific and relevant licensing grounds contained in the relevant sanctions legislation. It ‘interprets licensing grounds in EU and UK sanctions regimes narrowly’ and cannot issue licences to cover conduct that has already taken place.[34] When interpreting licensing grounds, OFSI ‘takes into account the way in which other EU Members States’ have approached them.[35]

The OFSI Guidance contains a useful explanation of the approach taken by OFSI in relation to the licensing grounds typically found in EU sanctions legislation.[36] These include:

  • Making available funds or economic resources necessary to satisfy the basic needs of designated persons: OFSI considers that ‘basic needs involve those expenses which are necessary to ensure that the very existence of the designated person or dependent family members is not imperilled. These needs will be different if the designated person is a legal entity rather than a natural person.’ OFSI does not consider that this ground should be used to enable designated persons to continue the lifestyle or business activities they had before they were designated.
  • Legal fees and disbursements: OFSI states that such fees must be reasonable, and must relate specifically to the provision of legal advice or involvement in litigation or dispute resolution. In addition, the sums that could be expected to be recouped if costs were awarded in litigation ‘provide a useful starting point for assessing the reasonableness of legal fees and disbursements.’
  • Satisfaction of prior court judgements or arbitration decisions against the designated entity: OFSI’s position is that the judgment/decision must have been given before the date of designation, and cannot be for the benefit of a designated person.
  • Satisfaction of prior contractual obligations of the designated person: again, OFSI contends that the contract or obligation must have arisen prior to the date of designation and cannot result in funds or economic resources being made available to the designated person.
  • Extraordinary expenses: OFSI states that these must be extraordinary in nature (not recurring and unavoidable). This ground cannot be used where other grounds are more suitable or as a way of avoiding the clear limitations of those other grounds.

UK autonomous sanctions (by contrast with EU sanctions) contain a general power to issue licences, as opposed to specified grounds for doing so. OFSI has issued a small number of general licences, which can be used without making an application to OFSI. These general licences relate to the provision to designated persons of insurance and legal aid (or other legal assistance). A person or entity relying on a general licence has a duty to report the activity to OFSI.[37]

The OFSI Guidance specifies the information which must be included in an application for a sanctions licence. These requirements are strict, and incomplete applications will be returned to the applicant without being considered.[38] OFSI indicates that it ‘aims to engage with applicants on the substance of completed applications within four weeks,’ but reminds applicants that this ‘does not mean that a licence will necessarily be issued within four weeks.’ It also undertakes to priorities urgent cases involving a risk of harm or a threat to life.[39]

Recipients of licences may apply to OFSI for their amendment, variation or extension. As the OFSI Guidance explains, in the event that an applicant is aggrieved by a licensing decision made by OFSI, it has the right to ask OFSI to review its decision, to submit a fresh application with new or additional evidence or supporting arguments, or to apply to the courts for judicial review of the decision.[40]

Licences granted by OFSI apply only to conduct which is subject to the jurisdiction of the UK courts. The OFSI Guidance indicates that licences should also be sought in other countries where their jurisdiction is likely to be relevant.[41] This means that where a transaction engages the jurisdiction of multiple countries, it may be necessary to seek licences in each country. The OFSI Guidance also explains that licences ‘often require information to be reported to OFSI within a specific time frame following the grant of the licence. A failure to comply with these reporting requirements may result in the revocation, suspension or termination of a licence or further restrictions being included in it. It may also result in a criminal prosecution or monetary penalty.’[42]

Trade sanctions are dealt with through a separate process. It should be remembered that some transactions may require licences in respect of applicable financial sanctions as well as applicable trade sanctions. The Department for International Trade maintains a web page containing links to a substantial body of guidance relating to the licensing regime for trade sanctions.[43] Export control licence applications are processed through an online system called SPIRE.[44]

Reporting obligations and investigative powers

As is explained in Chapter 2, EU sanctions legislation contains obligations to report to competent authorities information that would facilitate compliance with asset freezes.

The EU law reporting obligation is enforced in the UK statutory instruments implementing the financial sanctions contained in EU Regulations. These set out specific reporting obligations for relevant institutions, businesses and professions to inform OFSI where they know or have reasonable cause to suspect that a person is a designated person, or that a breach of a sanctions prohibition has been committed.[45]

Specifically, the obligation applies to:

  • firms with permission under Part 4A of the Financial Services and Markets Act 2000 (permission to carry on regulated activities), as well as firms exercising passporting rights under that Act, and undertakings that operate a currency exchange office, transmit money (or any representations of monetary value) by any means, or cash cheques made payable to customers; and
  • auditors, casinos, dealers in precious metals or stones, estate agents, external accountants, independent legal professionals, tax advisers, trust or company service providers.

Definitions of these businesses and professions can be found in the relevant UK regulation for each EU sanctions regime. Because of the way the UK’s sanctions reporting regime has developed, these definitions are typically found in different parts of the instrument, some in the interpretation provisions and others in a schedule. The reporting obligation itself is set out in a schedule, with related information provision powers.

The reporting obligation arises only where the information on which the relevant knowledge or suspicion is based came to the institution in the course of carrying on its business. A report made to OFSI pursuant to such a reporting obligation must specify the information or other matter on which the knowledge or suspicion is based, along with any other information held which may assist in identifying the person who is designated (or who is known or suspected to have breached a prohibition). Where a designated person is a customer of an institution covered by the reporting obligation, that institution must also state the nature and amount or quantity of any funds or economic resources held for that customer.

One effect of the reporting obligation is to require institutions to self-report sanctions breaches (as well as to report breaches committed by others). The OFSI Enforcement Guidance indicates that OFSI will apply a reduction of up to 50 per cent to any civil monetary penalty imposed on any person who has given a ‘prompt and complete voluntary disclosure’ of a breach of financial sanctions.[46] As explained in Chapter 5 of this guide, breaches of financial sanctions legislation are qualifying offences for the purposes of deferred prosecutions agreements under the Crime and Courts Act 2013.[47]

It is important to note that the reporting obligations cover those working in the legal sector. The phrase ‘independent legal professional’ means ‘a firm or sole practitioner who by way of business provides legal or notarial services to other persons, when providing such services’.[48] Sanctions regulations typically provide expressly that lawyers are not required to disclose any legally privileged information pursuant to the reporting obligation,[49] and the Law Society has issued guidance indicating that the obligation does not extend to privileged information.[50] Where this obligation arises, careful consideration will have to be given as to whether the information on which knowledge or suspicion is based is privileged. OFSI indicates that it may ‘challenge a blanket assertion of legal professional privilege where it is not satisfied that such careful consideration has been made’.[51]

UK legislation giving effect to EU financial sanctions also empowers OFSI to compel any person in or resident in the UK to provide information or documents. It is a criminal offence to fail to comply with such a request without reasonable excuse. It is also an offence to provide false information in response, to destroy or conceal information, or otherwise to obstruct OFSI in the exercise of its powers. Information obtained by OFSI pursuant to a reporting obligation or its investigative powers may be shared with other law enforcement agencies both in the UK and in the EU where this would assist in ensuring compliance with an EU Regulation.

The UK’s autonomous sanctions laws also contain reporting obligations. For example, the Terrorist Asset-Freezing etc. Act 2010 requires certain firms (the definitions for which are the same as for the statutory instruments referred to above) to make a report where it has knowledge or reasonable cause to suspect that a person is a designated person, or has breached one of the Act’s prohibitions relating to designated persons.[52]

The Brexit transition period

The Brexit transition period runs from 31 January 2020[53] and 31 December 2020 (barring any extension).[54] During this period, the UK will continue to be bound by EU sanctions. UN sanctions will continue to be implemented in the UK through EU law during this time.

In preparation for the expiry of the Brexit transition period (also referred to as the completion of the implementation period), the UK government has created a number of autonomous UK sanctions regimes by way of secondary legislation in the form of regulations adopted under SAMLA. The majority of the provisions of this legislation will come into force on ‘implementation period completion day’.[55] Regulations have also been made under SAMLA to govern the administration of these autonomous sanctions.[56] Those EU sanctions regimes that have not been replaced by regulations under SAMLA will continue to remain in force as ‘retained EU law’[57] in the form they are in on expiry of the transition period, until they are repealed.

Sanctions after the Brexit transition period

Introduction

As indicated, at the end of the Brexit transition period (specifically, at 11pm on 31 December 2020, in the absence of any extension), EU sanctions will no longer apply in the UK. As explained, SAMLA provides the legislative framework that enables the UK to continue to implement UN sanctions regimes and to impose its own sanctions following its departure from the EU.

The European Union (Withdrawal) Act 2018 will preserve current EU sanctions regimes in force when the Brexit transition period expires. However, the UK will not be able to rely on provisions in that Act in the long term because they do not permit the preserved sanctions to be amended to keep up with international events, and so existing regimes would quickly become out of date. Without new domestic sanctions powers, the UK would not be able to add, amend or lift sanctions regimes in response to UN requirements or in response to other objectives, such as foreign policy or national security imperatives.

SAMLA is a substantial piece of legislation which will transform the way in which sanctions in the UK are created, enforced and challenged; we have set out some of the key changes SAMLA will make to those processes.

Sources of UK sanctions

SAMLA gives powers to the ‘appropriate minister’ in the UK, defined as the relevant Secretary of State or HM Treasury,[58] to make regulations imposing sanctions. The appropriate minister can make regulations when the minister considers it is ‘appropriate’, for the following purposes:[59]

  • to comply with an obligation that arises as a result of a UN Security Council Resolution;
  • to comply with any other international obligation (which could include obligations arising from UK membership of other international organisations, for example the Organization for Security and Co-operation in Europe, as well as other international treaties or agreements); or
  • for a ‘discretionary purpose’,[60] as specified in Section 1(2) of SAMLA. These purposes include the prevention of terrorism (in the UK or elsewhere), furthering the interests of national security or the interests of international peace and security, furthering a foreign policy objective of the UK, promoting the resolution of armed conflicts or the protection of civilians in conflict zones, deterring gross violations of human rights, promoting compliance with human rights law, preventing the spread and use of weapons and materials of mass destruction, and promoting respect for democracy, the rule of law and good governance.

If regulations are made under the ‘discretionary purpose’ section, there are additional requirements imposed on the minister. A minister can only impose sanctions under a ‘discretionary purpose’ if there are good reasons to pursue that purpose of the regulations,[61] and the Ministers must have determined that the imposition of sanctions is a reasonable course of action for that purpose.[62] The minister must lay before Parliament an explanatory report detailing the reasons for the introduction of the regulations in such instances.[63] The only exception is where disclosure would damage national security or international relations.[64]

In line with the discretionary purposes linked to human rights (as listed above), the UK government announced a Global Human Rights Sanctions regime on 6 July 2020. On the same date, the UK government designated 47 individuals and two quasi-governmental organisations under the Global Human Rights Sanctions Regulations 2020 (GHRS). This regime is covered below.

Designation by name

SAMLA empowers the UK to designate under its sanctions regimes those individuals who have been designated by UN sanctions.[65] In addition to this, the minister can designate a person where the minister has reasonable grounds to suspect the person is involved in, or connected to, an activity set out in the regulations for a particular sanctions regime (an involved person).[66] It is important to note that SAMLA confers a power to designate an entity on the basis that it is owned or controlled by another designated person, and the revised OFSI guidance applicable to the UK’s sanctions regime after the transition period (the Updated OFSI Guidance) indicates that the UK ‘will look to designate owned or controlled entities/individuals in their own right where possible’.[67] The Minister must also consider that it is appropriate to designate that person, having regard to the purpose of the sanctions regime as set out in the regulations and the likely significant effects of the designation on the person.

When a person has been designated by name, the notification required by must include a brief statement of reasons. However, it should be noted that the minister does not have to disclose anything which might damage national security or international relations, the prevention or detection of serious crime, or the interests of justice.[68]

Designation by description

SAMLA also permits a minister to designate persons by description rather than by name. ‘This power can only be used when the minister cannot identify by name all the persons falling within the description, and the description is sufficiently precise that a reasonable person would know whether any person falls within it.’[69]

Territorial extent and application

The provisions of SAMLA and regulations made under it are enforceable against persons within the UK, the UK’s territorial waters[70] and, in certain instances, the airspace over the UK.[71] The regulations made under SAMLA may extend to:

  • British ships in foreign or international waters;[72]
  • ships without nationality in international waters;[73] and
  • foreign ships in international waters.[74]

When exercising such a power in relation to a foreign ship the Secretary of State must approve the action.[75] In such an instance the Secretary of State’s approval is contingent on either that ship’s home state requesting the assistance of the UK[76] or there being a basis for such action under international law.[77] These powers are not extended to aircraft.

The provisions of SAMLA are also enforceable against all UK persons, wherever they are in the world. A UK person is a UK national or a body incorporated or constituted under the law of any part of the UK.[78] This means that the UK entities and their non-UK branches must comply with UK sanctions law even when their activities take place abroad.[79]

Types of sanctions

SAMLA provides for a wide range of sanctions to be imposed by regulations, including financial sanctions, trade sanctions, immigration sanctions, and aircraft and shipping sanctions.

Financial sanctions made pursuant to SAMLA may contain prohibitions and requirements which are similar but not identical to those found in EU sanctions. Under Section 3 of SAMLA, regulations may provide that funds or economic resources owned, held or controlled by designated persons must be frozen, restrict the provision of financial services to or by designated persons (or persons ‘connected with a prescribed country’), prevent the making available of funds or economic resources to such persons (as well as the receipt of funds or economic resources from them), prohibit entering contracts with such persons, and prevent certain financial services being offered where they relate to financial products issued by designated persons. A breach of any such prohibition will be a criminal offence.[80]

As with pre-SAMLA financial sanctions, the various prohibitions on dealing with designated persons apply to dealing ‘directly’ as well as ‘indirectly’. Section 60 contains a broad definition of funds and economic resources which is largely akin to the corresponding definitions under the pre-SAMLA regime.

The Updated OFSI Guidance suggests that the phrase ‘financial services’ will be interpreted more broadly than the phrase ‘financial assistance’ under existing EU sanctions regimes. In particular, it will extend to the processing of payments.[81]

As regards trade sanctions, which are covered at Section 5 and Schedule 1, SAMLA provides a raft of powers, including powers to restrict imports and exports to/from prescribed countries, as well as where those imports or exports are for the benefit of a designated person, and to prevent the transfer of technologies to a designated person, as well as the sale of land to or by a designated person. Services relating to such imports, exports, transfers, sales and acquisitions may also be prevented by powers conferred by SAMLA. The ECJU will remain responsible for controlling and licensing the export of controlled goods.[82]

Immigration sanctions are covered at Section 4 of SAMLA, which confers powers to refuse leave to enter or to remain in the UK.[83] Aircraft and shipping sanctions (covered at Sections 6 and 7 respectively) provide powers in relation to aircraft and ships connected to designated persons or prescribed countries, such as detaining them, preventing them from entering or leaving UK airspace or waters, and preventing their registration in prescribed countries.

As we have previously set out, OFSI maintains two lists, the Consolidated List and the Capital Markets List. From 31 December 2020, these lists will no longer incorporate designations and restrictions made under European law. The GHRS are the first stand-alone UK sanctions to come into force under SAMLA, and their introduction marks the UK’s first significant divergence from the EU’s sanctions regimes. We have set out some of the key features of the GHRS and we await with interest how these Regulations are applied and inevitably challenged.

As mentioned above, in July 2020, the UK announced the designation of a number of individuals and entities under a human rights sanctions regime. Under the GHRS, if the Secretary of State has reasonable grounds to suspect that a person is an ‘involved person’, he or she can designate that person[84] and impose financial sanctions in the form of an asset freeze and a prohibition on making funds or economic resources available, directly or indirectly, to or for the benefit of that person, as well as imposing a travel ban. These are the sanctions that have now been imposed on the 47 individuals and two organisations referred to above.

It should be noted that the definition of an ‘involved person’ is very broad and is defined as a person who the Secretary of State has reasonable grounds to suspect is or has been involved in an activity

which, if carried out by or on behalf of a State within the territory of that State, would amount to a serious violation by that State of an individual’s (a) right to life (b) right not to be subject to torture or cruel, inhuman or degrading treatment or punishment, or (c) right to be free from slavery, not to be held in servitude or required to perform forced or compulsory labour, whether or not the activity is carried out by or on behalf of a State.[85]

The definition of an ‘involved person’ also includes a person (which is likely to be an entity) who is owned or controlled directly or indirectly by a person who is or has been involved in such an activity (namely activity relating to the human rights abuses set out above),[86] is acting on behalf of or at the direction of a person who is or has been so involved, or is a member of, or associated with, a person who is or has been so involved.[87] As set out above, the Secretary of State can designate any individual or entity fulfilling these criteria.

Another key feature of the GHRS is the ownership and control criteria set out in Schedule 1. The Schedule sets out the UK’s post-Brexit criteria for assessing ownership or control and marks a departure from the EU ownership and control test. These criteria mirror ownership and control provisions found in other regulations adopted under SAMLA (see below).

Ownership and control

Section 62 of SAMLA permits specific definitions to be inserted into each sanctions regulation on ownership and control. The regulations adopted to date contain identical provisions setting out the meaning and thresholds for ownership and control of an entity by a designated person. A company is owned or controlled directly or indirectly by another person if either or both of the following two conditions is met:

  • the person holds directly or indirectly more than 50 per cent of the shares or voting rights in the company, or the right, directly or indirectly, to appoint or remove a majority of the board of its directors; or
  • it is reasonable to expect that the person would ‘(if [the person] chose to) be able, in most cases or in significant respects, by whatever means and, whether directly or indirectly, to achieve the result that affairs of [the company] are conducted in accordance with [the person’s] wishes’.[88]

Further provisions on ownership and control are set out in schedules to the regulations adopted under SAMLA.

As noted above, an entity owned or controlled by a designated person is now liable to designation in its own right. It is likely that there will be additional designations under the ownership and control criteria as the Secretary of State becomes aware of individuals or entities linked to the already designated individuals and organisations. Companies will need to conduct significant due diligence when dealing with entities that may be linked to the designated individuals and organisations.

The regulations will also need to be read alongside the Updated OFSI Guidance on ownership and control.[89] The Updated OFSI Guidance provides guidance on when an entity may become subject to an asset freeze if a designated person owns a minority interest in that entity. There is also guidance on how to deal with funds which are jointly owned by a designated person.

The Updated OFSI Guidance also makes clear that if the relevant ownership and control criteria are met

and the person who owns or controls the entity is also a designated person, then financial sanctions will also apply to that entity in its entirety (meaning these assets should also be frozen). The prohibitions on making funds or economic resources available directly or indirectly to a designated person, also prohibit making them available to an entity who is owned or controlled, directly or indirectly, by the designated person. The UK Government will look to designate owned or controlled entities/individuals in their own right where possible.[90]

This is arguably a hardening of the European position, as there is no option of arguing that even if the criteria are met, the entity in question is not in fact owned or controlled by a designated entity and therefore making economic resources available to such an entity does not amount to a sanctions breach. Unlike the EU guidance on ownership and control, the definitions adopted for the purposes of the SAMLA regulations are not presented as examples of circumstances in which ownership and control can be presumed unless rebutted, but instead as conclusive indicia of ownership and control for the purposes of the UK autonomous sanctions. We suspect that the ownership and control provisions of the regulations and the OFSI guidance will provide fertile ground for interpretation and legal challenge once the UK is no longer bound by EU law and the regulations come into force in full.

Challenging designations and delisting under SAMLA

One of the key differences between the pre and post Brexit UK Sanctions regime is the way in which those subject to financial sanctions can challenge their designation. Under the current pre-Brexit regime, persons designated under EU sanctions, either by virtue of a UN listing or an EU Listing, are only able to challenge their designations at EU level and, to a more limited extent, UN level. SAMLA permits individuals and entities to challenge their listing in the UK, and to request the UK’s assistance to secure their removal from a UN list.

Although SAMLA provides a mechanism for those listed under UK and UN Sanctions regime to challenge their listing, many persons would also be designated under corresponding EU sanctions. There is no mechanism to challenge EU designations from the UK.

Right to request variation or revocation of designation

SAMLA provides a designated person the right to ask the government to revoke or vary his or her designation,[91] for example if a person believes he or she has been misidentified or considers the designation does not meet the required evidentiary threshold.[92]

The evidentiary threshold for designation by name and by description is set out in Sections 11(2) and 12(5) of SAMLA respectively. These requirements are:

  • that the appropriate minister has ‘reasonable grounds to suspect’ that the person, organisation or the person falling within that description is an involved person[93] (see above for the meaning of this phrase); and
  • that the appropriate minister considers that it is ‘appropriate’ to designate that person.[94]

The UK government’s response to the public consultation on the future UK sanctions regime states that the ‘reasonable grounds to suspect’ test is the appropriate evidentiary threshold.[95] This threshold would only be met if there is sufficient information or evidence to enable the government to form a reasonable suspicion.[96] This is the standard of proof applied by the EU courts, and confirms that the UK government does not consider it necessary to apply the criminal standard of proof to sanctions designations.[97]

Section 23 of SAMLA allows designated persons access to quick redress, and is labelled as an administrative challenge.[98] It is clear from SAMLA that the decision of any such request must be made as soon as ‘reasonably practicable’[99] and the person who makes the request must be informed of the decision and the reasons ‘as soon as reasonable practicable after the decision was made’.[100]

This route is not available, however, to persons subject to a UN designation. UN designated persons must request that the appropriate minister ‘use their best endeavours’ to persuade the UN to remove them from the relevant UN instrument.[101]

Once a request has been made, an appropriate minister must decide whether or not to comply with the request.[102] The same designated persons cannot submit another request upon assessment by the appropriate minister, unless that person can show that there is a significant matter of which the government was not aware.[103]

The appropriate minister who made a designation has the discretion to revoke or vary that designation.[104] Revoking a designation means that the designated person would no longer be subject to the restrictions set out in the relevant regulation.[105] Varying a designation allows the minister to add any changes to the designation, such as updating information used to identify an individual.[106]

However, a minister is obliged to revoke a designation when the required conditions of the relevant designation power are not met.[107] This may be as a result of the government’s own review of designations, or if a designated persons seeks reassessment of their designation.

Designated persons seeking reassessment of their designation

SAMLA also provides designated persons a route to challenge government decisions in the High Court, or in Scotland, the Court of Session.[108]

When considering an application brought under Section 38 of SAMLA, the courts will apply the legal principles of judicial review.[109] If a designated person seeks a revocation or variation of their listing, he or she must apply for this through the administrative process listed in SAMLA before he or she is able to access the redress through a legal challenge provided.

The following decisions can be challenged in the relevant courts:

  • a request to review, or a decision after the request, on whether a UK designation should be varied or revoked;[110] or
  • if the appropriate minister did not comply with the request to use best endeavours to persuade the UN to remove them from the relevant UN instrument.[111]

Under proceedings on an application under Section 38 of SAMLA, the courts may not award damages unless the court is satisfied that the tort of negligence was committed or the decision concerned was in bad faith.[112] This approach is comparable with the current law on awards of damages in sanctions cases within the EU.[113] This section also confirms that legal challenges are to be dealt with under the provisions in Section 38.[114]

Periodic government review

Section 24 of SAMLA requires the government to conduct a periodic review of sanctions regulations made under section 1 of SAMLA and any ‘qualifying designations’ made by an appropriate minister. ‘Qualifying designations’ is set out in Section 24(3) of SAMLA and includes designations that:

  • freeze funds or economic resources owner, held, or controlled by designated persons;
  • prevent financial services from being provided to, or for the benefit of designated persons;
  • prevent funds or economic resources from being made available to, or for the benefit of designated persons; or
  • provide for designated persons to be excluded persons for the purposes of Section 8B of the Immigration Act 1971.

The appropriate minister must review each qualifying designation and decide whether to revoke, vary, or take no action with it.[115] A review must occur within three years of a qualifying designation being made. After this initial review, a further review must be conducted within three years of the preceding review, for as long as the designation remains in place.[116]

Licensing

OFSI will continue to be responsible for issuing licences in connection with financial sanctions after the end of the Brexit transition period. The Updated OFSI Guidance confirms that the licensing process will remain broadly unchanged, but with several new exceptions. In addition, specific licenses that were issued while the UK was bound by EU sanctions ‘will be treated as if they had been issued under the relevant SAMLA Regulations’[117] and can be relied upon until they expire.

However, the Updated OFSI Guidance hints at a potential divergence of approach between the UK and EU as regards licensing. In the Updated OFSI Guidance, the reference to taking ‘into account the way in which other EU Member States approach [licensing]’ has been removed.[118]

The most significant changes to licensing and exceptions under the new UK sanctions regime are as follows:

  • UK autonomous sanctions will have a greater number of typical licensing grounds than EU sanctions. The Updated OFSI Guidance sets out OFSI’s anticipated approach to these additional licensing grounds:[119]
    • Humanitarian assistance activities: OFSI states that this ground ‘enables payments to facilitate any humanitarian activity; or where applicable, any activity whose purposes are consistent with the objectives of UN Security Council Resolutions’. OFSI considers humanitarian assistance to include the work of non-governmental organisations carrying out relief activities for the benefit of civilians. Importantly, OFSI notes that a licence ‘may still be required despite an activity using government funds.’
    • Diplomatic missions: OFSI sets out that a licence may be granted to ensure the ‘proper functions of a diplomatic mission or consular post’. A pre-requisite for such a licence is compliance with international law.
    • Extraordinary situations: this licensing ground applies to non-UN designated persons, and is intended to enable ‘anything to be done to deal with an extraordinary situation’. The Updated OFSI Guidance makes it clear that this is intended to cover ‘disaster relief or provide aid’. This licensing ground cannot be used ‘where other grounds are more suitable’ or in an attempt to circumvent a limitation present in respect of another ground.
  • A potential willingness to increase the use of general licences.[120] As previously noted, OFSI has issued a small number of general licences under the UK’s autonomous sanctions regime. The Updated OFSI Guidance suggests that the UK government will make use of these licences in unforeseen circumstances to support policy priorities. The Updated OFSI Guidance also sets out how to register with OFSI in the event that a general licence is granted on a conditional basis.
  • The introduction of the concept of directions. A direction may be issued under SAMLA in respect of a statutory requirement, and can provide an exception to a requirement.[121] Such directions are only available for certain sanctions regimes, and are applied for using the license form on the OFSI website.[122] Directions may be conditional, and can be varied by OFSI at any time.
  • Allowing the transfer of an interest in frozen funds or resources.[123] A new exception has been detailed in the Updated OFSI Guidance, allowing an independent person to transfer an interest in frozen funds or resources to another person where:
    • the independent person is not a designated individual;
    • they do not hold the interest jointly with a designated individual;
    • they are not controlled by a designated individual; and
    • the independent person holds the interest in the funds or resources.
  • Allowing the transfer of ring-fenced funds.[124] The Updated OFSI Guidance also confirms that UK autonomous sanctions will contain an exception to allow large financial institutions to transfer funds held or controlled by a designated individual in order to comply with the ring-fencing requirements imposed under the Financial Services (Banking Reform) Act 2013.

The Updated OFSI Guidance also provides a greater level of information about its future approach to licensing grounds that were typically included within the previous EU sanctions regimes. In particular, this includes (1) what constitutes basic needs for entities,[125] and (2) what should be included within an application for a licence to charge for legal services.[126]

Reporting obligations and investigative powers

The reporting obligations imposed by the new UK sanctions regime remain largely unchanged from the requirements previously imposed by the UK instruments implementing EU Regulations.[127] The general requirement to report a breach to the competent authorities previously imposed by EU financial sanctions legislation has not been replicated in the new UK sanctions regime.

The Updated OFSI Guidance indicates that OFSI’s approach to privileged material will remain unchanged. The updated Regulations issued under SAMLA now explicitly state that legal representatives do not need to ‘disclose any privileged information in their possession in that capacity’.[128] OFSI reiterates, however, that any blanket assertion of privilege may be challenged.

The Updated OFSI Guidance provides greater detail about OFSI’s power to require information.[129] The powers, however, are broadly the same. Similar to the pre-Brexit regime, it is a criminal offence to fail to comply with a request for information, and OFSI may disclose the information it receives to third parties (without the EU law requirement that such dissemination should be for purposes connected to sanctions). Any such disclosure, however, will need to comply with applicable data protection law.

Footnotes

1 Paul Feldberg and Robert Dalling are partners at Jenner & Block London LLP.

2 See https://www.un.org/securitycouncil/sanctions/information.

3 See the United Nations and European Union Financial Sanctions (Linking) Regulations 2017/478.

4 See, for example, Council Regulation (EU) No. 36/2012, Article 33.

5 EU financial sanctions are governed by European Union financial sanctions regulations adopted under the European Communities Act 1972, and EU trade sanctions by export control orders adopted under the Export Control Act 2002.

6 See the Belarus (Asset-Freezing) Regulations 2013/164, Regulation 1 as an example. The legislation should be carefully consulted as to what UK nationality covers.

7 See the Export Control Act 2002, Sections 2, 3, 4 and 11.

8 See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/708990/Monetary_Penalties_Guidance_web.pdf.

9 See the Office of Financial Sanctions Implementation’s [OFSI] Enforcement Guidance at Paras. 3.6 to 3.9.

10 Section 143 of the Policing and Crime Act 2017 sets out a list of financial sanctions instruments in respect of which a breach may give rise to the imposition of a civil monetary penalty.

11 See the OFSI Financial Sanctions Guidance [OFSI Guidance] (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862451/OFSI_general_guide_to_Financial_Sanctions.pdf) at Section 3.

12 See id., at Section 3.1.

13 See id., at Section 3.1.2.

14 See id., at Section 3.1.3.

15 id.

16 Export Control Order 2008, Schedules 2 and 3.

17 Council Regulation (EU) No. 1334/2000.

18 See ‘Written evidence from the Foreign and Commonwealth Office (FSP0015) (http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/foreign-affairs-committee/global-britain-the-future-
of-uk-sanctions-policy/written/94581.html) at Para. 11.

19 HM Treasury, ‘New body to support financial sanctions implementation launched’ (https://www.gov.uk/government/news/new-body-to-support-financial-sanctions-implementation-launched).

20 See the OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862451/OFSI_general_guide_to_Financial_Sanctions.pdf).

21 OFSI, About Us (https://www.gov.uk/guidance/uk-sanctions).

22 Export Control Joint Unit, About us (https://www.gov.uk/government/organisations/export-control-organisation/about).

23 See the OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862451/OFSI_general_guide_to_Financial_Sanctions.pdf) at Section 1.2.

24 See id., at Section 2.1, and the Consolidated List itself (https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets).

25 See id., at Section 2.1, and the Capital Markets List itself (https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets/ukraine-list-of-persons-subject-to-restrictive-measures-in-view-
of-russias-actions-destabilising-the-situation-in-ukraine).

26 The OFSI Guidance refers to sanctions guidance issued by the EU Council (http://data.consilium.europa.eu/doc/document/ST-10254-2015-INIT/en/pdf), which includes a section on ownership and control. In addition, OFSI published a blog post in December 2019 that provides guidance on how the agency approaches ownership and control (https://ofsi.blog.gov.uk/2019/12/17/am-i-dealing-with-a-sanctioned-entity/).

27 See the OFSI Guidance, at Section 4.1.

28 See id.

29 See id., at Section 4.1.2.

30 See id., at Section 4.2. The OFSI Guidance stresses that this list is not intended to be exhaustive. The EU Council’s sanctions guidance (http://data.consilium.europa.eu/doc/document/ST-10254-2015-INIT/en/pdf) also contains a section on control (see Para. 63). This contains three additional indicators of control (relating to the right to use the assets of a person or company, situations in which consolidated accounts are published, and sharing/guaranteeing financial liabilities). The EU guidance states that even where a ‘control criterion’ is established, the presumption of control may be rebutted on a case-by-case basis (Para. 64).

31 See Council Regulation (EU) No. 833/2014, Article 5.

32 See Terrorist Asset-Freezing etc. Act 2010, Sections 1 to 10.

33 See the Terrorist Asset-Freezing etc. Act 2010, at Sections 26 and 27, and the Counter-Terrorism Act 2008 at Section 63.

34 See the OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862451/OFSI_general_guide_to_Financial_Sanctions.pdf) at Section 6.2.

35 See id.

36 See id., at Section 6.3.

37 See id. at Section 6.5.

38 See id., at Section 6.6.

39 See id., at Section 6.7.

40 See id., at Section 6.10.

41 See id., at Section 6.11.

42 See id., at Section 6.13.

43 https://www.spire.trade.gov.uk/spire/fox/spire/help.

44 See https://www.spire.trade.gov.uk/spire/fox/espire/LOGIN/login.

45 See, for example, Libya (European Union Financial Sanctions) Regulations 2016/45, Schedule 1.

46 See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/708990/Monetary_Penalties_Guidance_web.pdf (Para. 4.9).

47 See Crime and Courts Act 2013, Schedule 17, Part 2.

48 See the definition as introduced by the European Union Financial Sanctions (Amendment of Information Provisions) Regulations 2017.

49 See, e.g., Libya (European Union Financial Sanctions) Regulations 2016/45, Schedule, Para. 6.

50 See https://www.lawsociety.org.uk/support-services/advice/articles/sanctions-guide/.

51 See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862451/OFSI_general_guide_to_Financial_Sanctions.pdf (Para. 5.4).

52 See Terrorist Asset-Freezing etc. Act 2010, Section 19.

53 The date on which the UK formally withdrew from the European Union by way of the European Union (Withdrawal) Act 2018.

54 The date agreed by the UK and EU when the Brexit transition period should end (see Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, Article 126).

55 Defined in Section 39 of the European Union (Withdrawal Agreement) Act 2020 as 31 December 2020
at 11.00pm.

56 See the Sanction Review Procedure (EU Exit) Regulation 2018 and the Immigration (Persons Designated under Sanctions Regulations) (EU Exit) Regulations 2020 (Draft).

57 As defined in Section 6 of the European Union (Withdrawal) Act 2018.

58 Sanctions and Anti-Money Laundering Act 2018 [SAMLA], Section 1(9).

59 id., at Section 1, Paras. (1) and (2).

60 id., at Section 2(1).

61 id., at Section 2(a).

62 id., at Section 2(b).

63 id., at Section 1(4).

64 id., at Section 1(5).

65 id., at Section 1.

66 An ‘involved person’ could include an individual, group or organisation involved in an activity, or a person controlled by them, someone acting on their behalf or an associated person.

67 See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/897735/UK_Financial_Sanctions_-_General_guidance__July_2020_.pdf at Para. 4.1.

68 SAMLA, Section 11. Section 10(4) of the Act provides that regulations made under SAMLA may make provision as to notification and publicity.

69 Explanatory Notes to SAMLA, Para. 58.

70 SAMLA, Section 21(1)(a).

71 id., at Section 6(1).

72 id., at Section 19(1)(a).

73 id., at Section 19(1)(b).

74 id., at Section 19(1)(c).

75 id., at Section 19(11)(a).

76 id., at Section 19(11)(b), Para. (i) or (ii).

77 id., at Section 19(11)(b)(iii).

78 id., at Section 21(1)(b).

79 id., at Section 21(22)(b).

80 See, for example, Russia (Sanctions) (EU Exit) Regulations 2019, Regulations 11 to 19.

81 See the Updated OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862349/Uk_financial_sanctions_general_guidance.pdf) at page 14.

82 See https://www.gov.uk/guidance/exporting-controlled-goods-after-eu-exit.

83 The UK government has published draft regulations relating to the exercise of these powers (the Immigration (Persons Designated under Sanctions Regulations) (EU Exit) Regulations 2020 (draft)).

84 Global Human Rights Sanctions Regulations 2020 [GHRS], Regulation 5.

85 GHRS, Regulation 4(2).

86 GHRS, Regulation 6(3).

87 GHRS, Regulation 6(2).

88 See, e.g., the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019/600, at Regulation 7.

89 See the Updated OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862349/Uk_financial_sanctions_general_guidance.pdf) at Section 4. Note that this is only guidance: the actual interpretation of sanctions legislation is a matter for the courts.

90 See id., at Section 4.1.

91 SAMLA, Section 23(1).

92 Explanatory Notes to SAMLA, Para. 89.

93 See SAMLA, Section 11(2)(a) for designation by name, and see Section12(5)(a) for designation by description.

94 See SAMLA, Section 11(2)(b) for designation by name, and see Section 12(5)(b) for designation by description.

95 See Government Response to Public Consultation on the UK’s future legal framework for imposing and implementing sanctions (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/635101/consultation-uk-future-legal-framework-sanctions-government-response.pdf) at pp. 9 to 12.

96 id.

97 Mohammed Al-Ghabra v. European Commission, Case T 248/13, Paras. 117 to 119.

98 Explanatory Notes to SAMLA, Para. 89

99 SAMLA, Section 33(2)(a).

100 id., at Section 33(2)(b). The Sanction Review Procedure (EU Exit) Regulations 2018, which came into force in January 2019, make provision for the procedure applicable to these requests.

101 id., at Section 25.

102 For UN sanctions, see SAMLA, Section 25 and Explanatory Notes to SAMLA, Para. 93. For UK designations, see SAMLA, Section 23 and Explanatory Notes to SAMLA, Para. 90.

103 Explanatory Notes to SAMLA, Para. 91.

104 SAMLA, Section 22(2).

105 Explanatory Notes to SAMLA, Para. 87.

106 id.

107 SAMLA, Section 22 Paras. (3) and (4).

108 id., at Section 38(2).

109 Explanatory Notes to SAMLA, Para. 111.

110 SAMLA, Section 38(1), Paras. (a) and (b).

111 id., at Section 38(c) and Explanatory Notes to SAMLA, Para. 110.

112 SAMLA, Section 39(2) and Explanatory Notes to SAMLA, Para. 113.

113 Explanatory Notes to SAMLA, Para. 113.

114 SAMLA, Section 39(1).

115 id., at Section 24(2).

116 id., at Section 24(4).

117 See the Updated OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862349/Uk_financial_sanctions_general_guidance.pdf) at Section 6.15.

118 See the Updated OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862349/Uk_financial_sanctions_general_guidance.pdf). The removal is from the text that now constitutes Section 6.4.

119 See id., at Section 6.5.

120 See id., at Section 6.7.

121 SAMLA, Section 15(2)(c).

122 See the Updated OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862349/Uk_financial_sanctions_general_guidance.pdf) at Section 6.17.

123 See id., at Section 6.2.

124 See id., at Section 6.2.

125 See id., at Section 6.5.

126 id.

127 The new regime uses a concept of ‘relevant firms’, which purports to cover all the sectors previously within the scope of UK sanctions reporting obligations (see, e.g., Regulation 39 of the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019/600).

128 South Sudan (Sanctions) (EU Exit) Regulations, Regulation 48.

129 See the Updated OFSI Guidance (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/862349/Uk_financial_sanctions_general_guidance.pdf) at Section 5.6.

Get unlimited access to all Global Investigations Review content