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Sanctions – UK adopts new financial and trade sanctions against Russia
On 1 March 2022 the UK introduced new financial and trade sanctions against Russia in response to the hostilities in Ukraine. These sanctions amend the existing sanctions legislation (Russia (Sanctions) (EU Exit) Regulations...
On 1 March 2022 the UK introduced new financial and trade sanctions against Russia in response to the hostilities in Ukraine. These sanctions amend the existing sanctions legislation (Russia (Sanctions) (EU Exit) Regulations 2019) (‘the Russian regulations’) and cover a wide range of economic and trade activities. Guidance issued by the UK government in respect of these regulations can be found here.
Members who are affected by these new sanctions should carefully review these regulations. As a reminder, UK sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons, wherever they are in the world. This includes all legal entities who are within or undertake activities within the UK or who are established under UK law (including their branches) irrespective of where their activities take place.
The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 impose the following restrictions:
- Prohibition on dealing with transferable securities or money-market instruments or providing loans or credit, if it has a maturity exceeding 30 days and is issued on or after 1 March 2022 to a person connected with Russia (including Russian incorporated entities) or the Russian Government.
- This prohibition also applies to entities (listed in Schedule 2 of the Russian regulations) which were already subject to financial restrictions which includes Sberbank, VTB bank, Gazprombank, Vnesheconombank (VEB), Rosselkhozbank OPK Oboronprom, United Aircraft Corporation, Uralvagonzavod, Rosneft, Transneft and Gazprom Neft.
- Prohibition on UK credit or financial institutions from establishing or continuing a correspondent banking relationship, and from processing a sterling payment to, from or via a designated person or a credit or financial institution owned or controlled by them
The UK has issued a number of General Licences (GL) to allow the winding down of certain activities which are caught by the above restrictions. For example, the new correspondent banking restrictions apply to Sberbank, but a GL has been issued (GL INT/2022/1277778) which allows for a 30 day winding down period. UK credit and financial institutions may continue correspondent banking relationships with Sberbank and process sterling payments to, from or via it (or the entities it owns or controls) until 31 March 2022.
A GL has also been issued in respect of the correspondent bank prohibitions where payments relate to ‘relevant energy products’ (GL INT 2022/1277877) namely crude oil, gas and petroleum products until 24 June 2022.
These GL do not authorise any act which will result in funds or economic resources being dealt with or made available in breach of the Russian regulations.
The Russia (Sanctions) (EU Exit) (Amendment) (No. 5) Regulations 2022 prohibit a UK individual or entity from providing financial services for the purpose of foreign exchange reserve and asset management to:
- the Central Bank of the Russian Federation
- the National Wealth Fund of the Russian Federation
- the Ministry of Finance of the Russian Federation
- a person owned or controlled directly or indirectly by any of the above; or
- a person acting on behalf of or at the direction of any of the above
The Russian (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022 expands the scope of the existing prohibitions on the export, supply, delivery and making available dual use goods and technology to, and for use in Russia, to include ‘critical industry goods and technology’. This includes certain listed electronics, computers, telecommunications equipment, information security, sensors and lasers, navigation and marine related-items and propulsion related-items.
It is prohibited to provide technical assistance, financial services, and brokering services in relation to dual-use goods and technology and critical-industry goods and technology. However a number of exceptions apply to critical-industry goods and technology, which includes in relation to personal items, the movement of aircraft and vessels, diplomatic missions, consumer communication devices and software updates.
The UK has removed Russia as a permitted destination from numerous open general export licences. The approval of new export licences for dual-use items to Russia has been suspended with immediate effect. Further details are provided in the notice issued by the UK Department for International Trade which can be found here.
The club continues to closely monitor the situation and will update members about further developments. If you have any queries, please contact your usual club contact.