United Kingdom

Territory-based Sanctions

On 30 March 2022, the UK published The Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022 (the Amending Regulations (No.7)) which amend the existing Russia sanctions regime to extend the territorial sanctions previously imposed on Crimea to the non-government controlled areas of the Donetsk oblast and Luhansk oblast of Ukraine (DNR and LNR regions).

The Amending Regulations (No.7) extend the existing finance, shipping, and trade sanctions relating to Crimea to the DNR and LNR regions. The Amending Regulations (No.7) also extend the relevant exceptions and licensing provisions to the DNR and LNR regions. The Amending Regulations (No.7) provide that the satisfaction of obligations arising under a contract concluded in relation to investments or trade in the DNR and LNR regions to 23 February 2022 is permitted.

Asset-freezing measures

Following the recent actions taken by the Russian Federation in Ukraine, the UK has listed a number of new entities and individuals as targets subject to an asset freeze (Designated Persons). We set out the listed entities and individuals in the tables below.

This means that it is prohibited under UK law to deal with funds or economic resources owned, held, or controlled by these individuals or entities, or to make funds available directly or indirectly to or for the benefit of them. The individuals are also now banned from travelling to the UK. These measures, which apply in the UK and to UK persons or entities wherever located, take immediate effect as of the date of listing and fall under the UK’s wider financial sanctions regime, such that failing to comply with or seeking to circumvent these provisions is enforceable by monetary penalties and is a criminal offense.

The full consolidated list of the UK’s asset freeze targets (which includes targets from sanctions regimes other than the Russia sanctions regime) is available on the Office of Financial Sanctions Implementation’s (OFSI) website here.

New Sanctions on Russian Financial Activity

On 1 March 2022, the UK published The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (the Amending Regulations (No.2)) and The Russia (Sanctions) (EU Exit) (Amendment) (No. 5) Regulations 2022 (the Amending Regulations (No.5)) which amend the existing Russia sanctions regime to bring into force restrictions on Russian financial activity previously announced.

The Amending Regulations (No.2) create extensions of the existing sectoral sanctions, as well as new measures:

• Extending the existing ban on dealing in transferable securities or money-market instruments of named Russian banks and companies to include their UK subsidiaries, issued on or after 1 March 2022. (The named banks and companies are: Sberbank, VTB Bank, Gazprombank, Vnesheconombank (VEB), Rosselkhozbank, OPK Oboronprom, United Aircraft Corporation, Uralvagonzavod, Rosneft, Transneft, and Gazprom Neft);
• Widening the existing ban to prohibit dealing with new transferable securities or money-market instruments issued on or after 1 March 2022 by:
  • Any entity connected with Russia, and not domiciled outside Russia on 1 March 2022;
  • Entities owned directly or indirectly more than 50% by such connected entities; or
  • The Government of Russia, including the Central Bank of the Russian Federation, or on its behalf.
  This ban does not extend to the Russian subsidiaries or Russian branches of entities domiciled outside Russia on 1 March 2022;

• Extending the existing ban on loan or credit arrangements with a maturity exceeding 30 days to the named banks and companies to include their UK subsidiaries, where those arrangements are made on or after 1 March 2022;
• Widening the existing ban to prohibit the granting of new loans or credit with a maturity exceeding 30 days on or after 1 March 2022 to:
  • Any entity connected with Russia, and not domiciled outside Russia on 1 March 2022,
  • Entities owned directly or indirectly more than 50% by such connected entities,
  • An entity acting on behalf of or at the direction of such entities, or
  • The Government of Russia, including the Central Bank of the Russian Federation.
  This ban does not extend to the Russian subsidiaries or Russian branches of entities domiciled outside Russia on 1 March 2022;

• Prohibiting UK credit or financial institutions from establishing or maintaining correspondent banking relationships with entities subject to an asset freeze under the UK Russia sanctions or with credit or financial institutions owned or controlled directly or indirectly by such entities. This encompasses activities such as international fund transfer, check clearing, and FX services; and
• Prohibiting UK credit or financial institutions from processing sterling payments (including clearing and settlement of such payments) to, from, or via entities subject to an asset freeze under the UK Russia sanctions or with credit or financial institutions owned or controlled directly or indirectly by such entities.

OFSI has issued a number of General Licenses in relation to specific entities for these new restrictions to ease the transition, which are summarized in the section below.

The Amending Regulations (No.5) create new prohibitions on the provision of financial services for the purposes of foreign exchange reserve and asset management involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, the Ministry of Finance of the Russian Federation, or persons owned, controlled, or acting on behalf of those institutions. For the purposes of the new restrictions, the following reserves or assets are in scope:

• Money-market instruments (including checks, bills, and certificates of deposit);
• Foreign exchange;
• Derivative products (including futures and options);
• Exchange rate and interest rate instruments (including products such as swaps and forward rate agreements);
• Transferable securities;
• Other negotiable instruments and financial assets (including bullion); and
• Special drawing rights.

Further restrictions have been announced by the UK, which are yet to be implemented. These include:

• Limiting the amounts Russian nationals can deposit in UK bank accounts; and
• Extending sanctions on financial activity to Belarus for its role in the assault on Ukraine.

In addition to the above, the UK has joined other key Western jurisdictions in the decision to remove “selected Russian banks” from the SWIFT messaging system. SWIFT is subject to Belgian law and, therefore, to EU sanctions. On 2 March 2022, the EU issued a regulation prohibiting, as of 12 March, the provision of specialized financial messaging services (i.e., SWIFT), which are used to exchange financial data, to the following banks (and entities in Russia directly or indirectly owned 50% or more by these banks): Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, Vnesheconombank (VEB), and VTB Bank. Most, if not all, of these banks were already sanctioned by the U.S./EU/UK, but the loss of access to SWIFT means that now even banks outside the U.S., EU, and UK will have difficulty engaging in any transactions with them.

The Amending Regulations (No.7) confer a power on the Secretary of State to provide that persons of a specified description are designated persons. As with persons designated by name, persons designated by description may be excluded from the United Kingdom and may be made subject to financial sanctions, including having their funds or economic resources frozen, or to shipping or aircraft sanctions.

On 8 June 2022, the UK published an updated version of its sanctions enforcement and monetary penalty guidance. The guidance reflects measures introduced in the Economic Crime (Transparency and Enforcement) Act 2022, most notably the imposition of a new strict civil liability test for imposing monetary penalties. The new test removes the requirement for OFSI to demonstrate that a person had knowledge or reasonable cause to suspect they were in breach of a financial sanction to issue a monetary penalty. The revised guidance took effect on 15 June 2022.

Treasury Licenses

New grounds are available for application for individual licenses for activity that would otherwise be in breach of an asset freeze under UK Russia sanctions. These cover humanitarian assistance activity, medical goods or services, the production or distribution of food, and diplomatic missions.

Individual license grounds are available for the new restrictions on:

• Loans and credit arrangements. These cover humanitarian assistance activity, medical goods or services, the production or distribution of food for the benefit of the civilian population, diplomatic missions, spaceflight activity, and extraordinary situations.
• Correspondent banking relationships. These cover basic needs, legal services, financial regulation, and extraordinary situations.
• Processing sterling payments. These cover humanitarian assistance activity, medical goods or services, the production or distribution of food for the benefit of the civilian population, diplomatic missions, and spaceflight activity.
• Foreign exchange reserve and asset management services. These cover humanitarian assistance activity, financial regulation, financial stability, the safety and soundness of a firm, and any extraordinary situation.

General Licenses

On 1 March 2022, OFSI issued further General Licenses under the Russia Regulations in relation to the broadened financial restrictions implemented on the same day (see above), which allow for:

i) A wind-down period until 24 June 2022 in respect of clearing and correspondent banking prohibitions relating to Sberbank and its subsidiaries for the purpose of making certain specified energy products available for use in the UK. This license was amended on 06 April to ensure the General License may continue to be used notwithstanding Sberbank’s designation as an asset freeze target;

ii) A one year license to allow VTB Bank to make payments, including for basic needs, reasonable fees, or service charges arising from routine holding and maintenance of its frozen funds and economic resources, and reasonable professional fees for the provision of legal services; and

iii) A one-year license to allow financial authorities to do anything with regard to VTB Bank related to prudential supervision, protecting, maintaining, or enhancing the financial stability of the UK. This license was amended on 1 April 2022 following VTB Capital plc’s entering administration to allow payments in connection with any insolvency proceedings relating to VTB Capital plc. 

On 29 March 2022, OFSI issued a General License under the Russia Regulations which allows for a wind-down period of positions involving Sovcomflot (and its subsidiaries). Under the General License, a person may wind down any transactions involving Sovcomflot to which it is a party, including the closing out of any positions, and a person, the relevant financial institutions, or Sovcomflot can carry out any activity reasonably necessary to effect this. This license takes effect from 29 March 2022 and expires on 30 June 2022.

On 21 April 2022, OFSI issued a General License under the Russia Regulations which allows for a wind-down period for persons to continue to make payments to Gazprombank or a Subsidiary under a contract entered into prior to 21 April 2022 for the purpose of making gas available for use in the European Union. A person making payments under this licence must keep accurate, complete, and readable records, on paper or electronically, of any activity purporting to have been permitted under this licence for a minimum of six years. This General Licence takes effect from 21 April 2022 and expires on 1 August 2022.

On 27 April 2022, OFSI issued a General License under the Russia Regulations which permits, subject to certain conditions, an officer of a Non-Crown Relevant Organisation (i.e., the FCA or any other organization as specified by HM Treasury) to carry out their duties and exercise powers which would otherwise contravene the asset-freeze restrictions under the UK Russia sanctions regime. This General Licence takes effect from 27 April 2022 and is of indefinite duration. It may be varied, revoked, or suspended by HM Treasury at any time.

On 12 May 2022, OFSI issued a General License under the Russia Regulations which allows for a one-year wind-down period for Amsterdam Trade Bank N.V. (and its subsidiaries). The General License allows payments and other permitted activities to take place in relation to winding down activities, basic needs, and insolvency proceedings associated with the Amsterdam Trade Bank N.V or a subsidiary of the same. This license takes effect from 12 May 2022 and expires on 12 June 2023.

On 23 May 2022, OFSI issued a General License under the Russia Regulations which allows UK nationals to purchase tickets for flights or rail journeys originating in, or within, Russia from PJSC Aeroflot, JSC Rossiya Airlines, JSC Ural Airlines, or Russian Railways. The licence takes effect on 23 May 2022 and expires on 23 May 2023.

On 30 May 2022, OFSI issued a General License under the Russia Regulations which allows Interim Managers appointed under the Charities Act 2011 to authorise certain uses of charity funds in relation to a charity linked to a Designated Person. The licence takes effect on 30 May 2022 and expires on 30 May 2023.

On 30 May 2022, OFSI issued a General License under the Russia Regulations which allows, subject to certain conditions, business operations involving the provision of Civilian Telecommunications Services (CTS) by ZAO TransTelecom Company, and news reporting services by a recognised news publisher (NMS). Under the General Licence, persons (other than Designated Persons) may make payments, either directly or via an unsanctioned third party, to or from i) ZAO TranTelecom Company (in the case of CTS); or ii) a sanctioned credit or financial institution (in the case of NMS). The licence also permits such persons to carry out activities reasonably necessary to effect the provision of CTS or NMS. The licence takes effect from 30 May 2022 and expires on 30 May 2024.

On 10 June 2022, OFSI issued a General License under the Russia Regulations which allows persons to make use of the retail banking services of a sanctioned credit or financial institution, provided that the payments made or received are intended for the personal use of a Person, and the total value of payments made does not exceed £50,000. The licence takes effect on 10 June 2022 and is of indefinite duration. It may be varied, revoked, or suspended by HM Treasury at any time.

Trade Sanctions

On 28 February, the UK’s Export Control Joint Unit (ECJU) published a notice to exporters announcing that it has suspended all current export licenses for dual-use items to Russia (including those where Russia is the final destination). Approval of new licenses for dual-use items to Russia has been suspended. Russia has been removed as a permitted destination for UK open general export licenses covering exports of specified oil and gas exploration products, chemicals, cryptographic development, exports after exhibitions, and specified software and hardware components for industry.

On 1 March, the UK published The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022 (the Amending Regulations (No.3)), which amends the existing Russia sanctions regime to bring into force trade restrictions previously announced:

• The Amending Regulations (No.3) create a new category of “critical-industry goods” which are set out in new Schedule 2A. Exceptions to this category are available for consumer communication devices for civilian use, or software updates for civilian use, which are set out in more detail in new Schedule 2B.
• Critical-industry goods, which are not dual-use goods, consist of new controls on the following types of specified items: systems, equipment, and components; test, inspection, and production equipment; software; and technology. Items covered are in the following categories: electronics, computers, telecommunication equipment, information security, sensors and lasers, navigation and avionics, marine, aerospace, and propulsion.
• There is an existing prohibition on the export, supply, delivery, and making available of military goods and technology to or for use in Russia. This ban has been extended to include dual-use goods and critical-industry goods. The prohibition also extends to the provision of technical assistance, financial services, funds, and brokering services in connection with dual-use and critical-industry goods and technology. Transitional licensing measures apply.

On 25 February, the UK Department for Transport issued a UK airspace restriction with immediate effect: “No aircraft which is owned, chartered, or operated by a person connected with Russia, or which is registered in Russia shall fly in UK airspace, including in the airspace above the UK’s territorial sea. This regulation does not apply to any aircraft flying in accordance with the permission of the UK Secretary of State for Transport, or to aircraft flying in accordance with a clearance issued by the Air Traffic Control Centre.”

On 1 March, the UK published The Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2022 (the Amending Regulations (No.4)), which impose a ban on ships entering UK ports where those ships are Russian flagged or registered, owned by a person connected with Russia, or owned by a person or entity listed under the UK Russia sanctions. These measures also prevent the new registration of such ships in the UK.

On 8 March, the UK published the Amending Regulations (No.6), which prohibit Russian aircraft from flying over or landing in the UK. It also confers powers on the Secretary of State, air traffic control, and airport operators to issue directions for the purpose of:

• Preventing Russian aircraft from entering the airspace over the UK or landing in the UK;
• Detaining or moving Russian aircraft which have entered the UK; and
• Requiring aircraft to leave the airspace over the UK.

Further, the Civil Aviation Authority (CAA) is given the power to refuse, suspend, or revoke permissions in respect of Russian aircraft. The registration of aircraft to the CAA register is prohibited where they are owned, operated, or chartered by demise by a person designated by the Secretary of State.

The Amending Regulations (No.6) also amend the trade measures in the existing Russian sanctions regime to add new categories of“aviation and space goods” and “aviation and space technology” to the existing restricted goods list. These measures also prevent a person from providing insurance or reinsurance services to a person connected with Russia or for the use of Russia in relation to the new categories. To ease the transition, ECJU and DIT have issued a General License in relation to insurance providers for these new restrictions, which are summarized in the section above.

The Amending Regulations (No.7) prohibits the provision to, or for the benefit of, a designated person of technical assistance relating to aircraft and ships. This includes a power to designate persons for the purposes of that sanctions measure, as well as relevant exceptions and licensing provisions.

On 24 March 2022, the UK Government published The Customs (Additional Duty) (Russia and Belarus) Regulations 2022, which brings into force previously announced trade restrictions relating to exports to and imports from Russia, denying Russia and Belarus access to Most Favored Nation tariffs for hundreds of their exports, depriving both nations key benefits of WTO membership. These measures include:

• Setting out an initial list of goods worth £900 million which will now face additional 35% tariff, on top of current tariffs – this list comprises of iron, steel, fertilizers, wood, tires, railway containers, cement, copper, aluminium, silver, lead, iron ore, residue/food waste products, beverages, spirits and vinegar (this includes vodka), glass and glassware, cereals, oil seeds, paper and paperboard, machinery, works of art, antiques, fur skins and artificial fur, ships, and white fish.

On 14 April 2022, the UK published The Russia (Sanctions) (EU Exit) (Amendment) (No. 8) Regulations 2022 (the Amending Regulations (No.8)), which amends the existing Russia sanctions regime to bring into force further trade restrictions as previously announced. The Amending Regulations (No.8) also sets out detailed definitions and lists for the new classes of goods falling within the restrictions. The new measures are as below:

• The inclusion of oil refining goods and technology in the existing restricted goods list, which prohibits the export of such goods to, or for use in Russia;
• The inclusion of quantum computing and advanced materials goods and technology in the existing restricted goods list;
• Prohibition on export of luxury goods to, or for use in, Russia; and
• Prohibition on import from, and export to Russia of iron and steel products.

On 20 June 2022, the UK published The Russia (Sanctions) (EU Exit) (Amendment) (No. 10) Regulations 2022 (the Amending Regulations (No.10)), which amends the existing Russia sanctions regime to bring into force further trade restrictions in relation to trade with Russia and the non-government controlled Ukraine territories. The new measures include:

• Prohibitions on the export to Russia, supply and delivery, making available, and transfer of:
  • internal repression goods and technology;
  • goods and technology relating to chemical and biological weapons;
  • maritime goods and technology;
  • additional oil refining goods and technology; and
  • additional critical industry goods and technology.
• Prohibitions on the export to, or for use in Russia of jet fuel and fuel additives, as well as prohibitions on the making available, export, and supply, directly or indirectly, of such products to or for use in Russia.
• Prohibitions on the import, acquisition or supply and delivery of revenue generating goods that originate in or are consigned from Russia.
• Prohibitions on the provision of technical assistance, and financial services, funds, and brokering services relating to iron and steel imports, and each of the new prohibitions listed above.
• Prohibitions on the export to or for use in, Russia of Sterling or EU-denominated banknotes; as well as prohibitions on the making available, supply, or delivery of such banknotes to a person connected with Russia; and on the making available of such banknotes for use in Russia.

On 26 June 2022, the UK announced that new exports of Russian gold will no longer be allowed to enter the UK, Canada, the U.S., and Japan thanks to tough new measures announced at the G7 Summit. The gold import ban will come into force shortly, and will apply to newly mined or refined gold. It does not impact Russian-origin gold previously exported from Russia. Legislation bringing the new sanctions into force is awaited.

Other Sanctions

On 6 April 2022, the UK announced new sanctions measures imposing an outright ban on all new outward investment to Russia and ending all imports of Russian coal and oil by the end of 2022. Legislation bringing the new sanctions into force is awaited.

On 27 April 2022, the UK published The Russia (Sanctions) (EU Exit) (Amendment) (No. 9) Regulations 2022 (the Amending Regulations (No.9)), which amends the existing Russia sanctions regime to bring into force new internet services restrictions. The new measures are as below:

• Providers of social media services, internet access services (i.e., internet service providers), and application stores must take reasonable steps to prevent their users in the United Kingdom from encountering or accessing online content generated by Designated Persons; and
• Confers new powers on the Office of Communications (OFCOM) to request information for the purposes of monitoring compliance with the new internet services restrictions and to issue monetary penalties of up to £1,000,000 in relation to a failure to comply with the new internet services restrictions.

On 4 May 2022, the UK announced new sanctions measures imposing a ban on services exports to Russia, cutting them off from doing business with UK sectors that are critical to the Russian economy. The new measures will mean Russia’s businesses can no longer benefit from the UK’s accountancy, management consultancy, and PR services. Legislation bringing the new sanctions into force is awaited.