March, 2022 - UK sanctions on Russia
- Date: 14/03/2022
The relevant UK legislation regarding sanctions relating to Russia is The Russia (Sanctions) (EU Exit) Regulations 2019 which has recently been amended by six additional regulations (“the Amendment Regulations”) following the outbreak of armed conflict in Ukraine.
The Amendment Regulations have imposed further sanctions, restrictions and prohibitions, including those summarised below. In addition, numerous entities and individuals have been added to the UK sanctions list of designated persons and are subject to an asset freeze. However, the sanctions position is changing rapidly and Members need to ensure they carry out thorough due diligence in respect of their contractual counterparties and commercial arrangements.
The Russia (Sanctions) (EU Exit) (Amendment) (No.4) Regulations 2022 came into force on 1st March, 2022 and prohibits the entry into UK ports of ships that are:
- owned, controlled, chartered or operated by a designated person;
- owned, controlled, chartered or operated by persons connected with Russia;
- flying the Russian flag;
- registered in Russia; or
- specified by the Secretary of State.
The Regulations prohibit any person from allowing a ship access to a UK port if it falls within the above definitions. They also prohibit a master or pilot of ship from causing or permitting a ship as defined to enter a UK port.
Securities, lending and correspondent banking restrictions
The Russia (Sanctions) (EU Exit) (Amendment) (No.2) Regulations came into force on 1st March, 2022 and imposed the following restrictions:
- A prohibition on dealing with transferable securities and money market instruments issued after 1st March, 2022 by:
- the Russian Government;
- a person connected with Russia or an entity owned by or acting on behalf/at the direction of a person connected with Russia; or
- an entity incorporated or constituted under UK law and owned by an entity listed in Schedule 2 which, to date, includes Sberbank, VTB bank, Gazprombank, VEB bank, Rosselkhozbank, OPK Oboronprom, United Aircraft Corporation, Uralvagonzavid, Rosneft, Transneft and Gazprom Neft.
- A prohibition on UK credit or financial institutions from establishing or continuing a correspondent banking relationship with a designated person or a credit or financial institution owned or controlled (directly or indirectly) by them.
- Existing restrictions were extended to prohibit the granting of loans or credit after 1st March, 2022 to:
- “persons connected with Russia” where the loan or credit has a maturity exceeding 30 days;
- an entity incorporated or constituted under UK law and owned by an entity listed in Schedule 2 where the loan or credit has a maturity exceeding 30 days; or
- any loan or credit to the Government of Russia.
Financial services restrictions
The Russia (Sanctions) (EU Exit) (Amendment) (No.5) Regulations 2022 came into force on 1st March, 2022 and 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 owner or controlled directly or indirectly by the persons listed above; or
- a person acting on behalf of or at the direction of any of the persons listed above.
The Russian (Sanctions) (EU Exit) (Amendment) (No.3) Regulations 2022 came into force on 1st March, 2022 and expands the existing trade restrictions in respect of military goods and military technology to include:
- a prohibition on the export, supply and delivery, making available and transfer of “dual-use goods” and “critical-industry goods” to, or for use in, Russia; and
- a prohibition on the export, supply and delivery, and making available and transfer of dual-use technology and critical-industry technology.
The critical-industry goods and critical-industry technology are set in Schedule 2A to the Regulations and includes certain electronics, telecommunications, sensors, lasers, marine, navigation/avionics and information security items.
The Russia (Sanctions) (EU Exit) (Amendment) (No.6) Regulations 2022 came into force on 8th March, 2022 and prohibits a Russian aircraft from flying over or landing in the UK. “Russian aircraft” is defined as an aircraft (i) owned, chartered or operated by a designated person or a person connected with Russia or (ii) registered in Russia.
The UK sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons, even outside the jurisdiction. All individuals and entities who are within or undertake activities within the UK’s territory and all UK nationals and entities established under UK law (irrespective of where their activities take place) must comply with the UK sanctions.
Further information and guidance regarding the UK sanctions relating to Russia can be found on the UK government website.
As always, if Members have any questions in relation to the above issues they are invited to contact the Club for further information.