Regulatory Outlook

Sanctions and Export Control | UK Regulatory Outlook February 2024

Published on 28th Feb 2024

OFSI guidance on new reporting requirements for designated persons | Sanctions evasion risk alerts | UK updates Russia sanctions guidance

UK publishes first sanctions strategy

On 22 February 2024, the UK government launched its first sanctions strategy, setting out the importance of collaboration with the private sector and international partners in addressing threats and the steps the UK is taking to strengthen sanctions implementation and enforcement. These include:

  • the new Office of Trade Sanctions Implementation, which investigates potential breaches and ensures trade sanctions are properly implemented and enforced, with a range of civil enforcement tools including the ability to levy monetary penalties;
  • additional support for HM Revenue and Customs to investigate and prosecute serious sanctions breaches, including expanded intelligence and data capabilities; and
  • continued investment in sanctions staffing and expertise – for example, the Foreign, Commonwealth and Development Office has more than doubled the number of staff working on sanctions following Russia's invasion of Ukraine.

See the press release

OFSI guidance on new reporting requirements for designated persons

The Office of Financial Sanctions Implementation (OFSI) published a blog on the new reporting measures that came into force in December 2023 alongside the government's latest tranche of trade sanctions against Russia:

  • immobilised assets reporting measure – relevant firms are now required to infirm OFSI of any funds or economic resources they hold for the Central Bank of Russia, Russian Ministry of Finance, or Russian National Wealth Fund; and
  • designated persons asset reporting measure – persons designated under the Russia financial sanctions regime must proactively provide details of their UK assets to OFSI.

From 13 February 2024, the OFSI will be transitioning to a new digital guidance format, designed to improve accessibility to its financial sanctions guidance.

Sanctions evasion risk alerts

On 1 February 2024, the UK government and G7+ Coalition partners issued an enforcement alert to help support governments and the industry to improve their compliance with the Russian oil price cap. The alert contains information on the key evasion methods and how to report suspected breaches of the oil price cap.

In January 2024, the National Crime Agency issued an amber alert warning the artwork storage sector of the risk of potential financial sanctions evasion through art storage facilities by high-net worth individuals. The alert advises the sector to conduct regular due diligence checks to ensure sanctioned individuals do not exploit these services to evade sanctions. See the press release.

UK updates Russia sanctions guidance

On 30 January 2024, the UK government updated its Russia sanctions guidance to include licensing grounds for Schedule 3DA (revenue generating goods). A licence may be granted for the provision of technical assistance, brokering services, financial services and funds relating to goods listed under Schedule 3DA

UK government response to independent review of counter-terrorism sanctions

On 16 January 2024, the independent reviewer of terrorism legislation, Jonathan Hall KC, published his review of the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019. The Foreign, Commonwealth and Development Office (FCDO) has issued its response to the report, in particular:

  • the FCDO is working with HM Treasury and the Home Office to implement a humanitarian exception across all UK financial sanctions regimes; and
  • OFSI will consider amending its charity sector guidance to reflect updated government guidance on the role of public officials and the exercise of control over public bodies.

House of Lords Committee report on Russia sanctions

On 31 January 2024, the House of Lords European Affairs Committee published its first report on the "impact of Russia's invasion of Ukraine on the UK-EU relationship". The report welcomed the government's response and made the following policy recommendations:

  • the government should consider introducing a process for periodic review of sanctions in force, so that were certain conditions are met, sanctioned entities may be removed from the sanctions list;
  • the government should address concerns over the uncertainty over companies controlled by designated persons and the work of the NCA and OFSI in enforcing sanctions breaches; and
  • to achieve a regular working arrangement between the UK and the EU on sanctions policy, the committee recommends the government to agree a memorandum of understanding with the EU on sanctions cooperation.

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