Article: UK sanctions after Brexit: what has changed?
News & Insights 12 January 2021
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From 11pm on 31 December 2020, EU sanctions ceased to apply in the UK. The UK’s sanctions framework is now regulated principally by the Sanctions and Anti-Monetary Laundering Act 2018 (the 'Sanctions Act').
Under the Sanctions Act, UK ministers can make regulations to implement UN sanctions and/or to impose sanctions for various defined purposes, such as the protection of international peace and security and the furtherance of the UK government’s foreign policy objectives.
Has anything changed?
Various statutory instruments have already been created under the Sanctions Act, many of which took effect at the end of the Brexit transition period. To date, the instruments predominantly implement UN sanctions into UK law and /or mirror existing EU sanctions. However, whilst there may be continuity in the policy objectives of such legislation, not all of the UK regulations are identically worded and some are more detailed than their EU counterparts. Consequently, some sanctions have the potential to apply differently in the UK. For example, under the EU Council Regulation No 833/2014, EU parties are prohibited from engaging in certain activities with any 'natural or legal person, entity or body in Russia for use in Russia'. Such activities include the supply of dual-use military goods as well as various technical, broking or financial services in the energy sector. Under the UK’s Russia (Sanctions) (EU Exit) Regulations, similar activity based restrictions apply to any 'person connected with Russia'. A person 'connected with Russia' is defined to include individuals and companies ordinarily resident, domiciled, located or incorporated in Russia. It has been suggested that this definition may introduce restrictions on certain activities with Russian companies in their operations outside of Russia.
Over time, there is likely to be more divergence. In July 2020, the UK enacted the Global Human Rights Sanctions Regulations 2020. Under this legislation, the UK has independently sanctioned at least 68 individuals and entities in connection with human rights abuses. Designations under this legislation have been made against individuals and entities in Russia, Saudi Arabia, Myanmar, North Korea, Belarus, Venezuela, the Gambia and Pakistan. In December 2020, the EU announced a similar global human rights sanctions regime, but designations under this new EU framework will be independent of the UK’s regime.
Of further is note is that the UK’s Office of Financial Sanctions Implementation has published guidance on sanctions specifically for the maritime sector which may indicate particular scrutiny by the UK on the shipping community. For further information on this guidance, please refer to our alert.
Who do UK sanctions apply to?
UK sanctions apply to the conduct of all UK persons, wherever they are in the world, including branches of UK companies based overseas. UK sanctions also apply to all persons conducting business in the UK, which includes UK-based P&I clubs.
What do I need to do?
Members conducting business with a UK nexus should review their sanctions policies to ensure that the impact of UK sanctions has been properly considered. In particular, such members may need to screen specifically against the UK Sanctions List in addition to other applicable sanctions lists such as the EU Consolidated Financial Sanctions List and the US Specially Designated Nationals and Blocked Persons List. The UK government’s sanctions list can be found here. Members with a UK nexus who trade in heavily sanctioned jurisdictions, such as Russia, should review the terms of the new legislation and consider whether their activities might be restricted under the UK’s legislation and/or whether they might require a license. Members should also consider reviewing their contractual sanctions clauses to ensure that, if appropriate, the UK is specifically mentioned as an relevant sanctions regime. By way of reminder, the Standard Club rules define 'sanctionable conduct' by reference to sanctions applicable in the EU, UK, USA, the place of incorporation or domicile of the member and/or the ship’s flag.