Regulatory Outlook

Sanctions and export control | UK Regulatory Outlook May 2024

Published on 31st May 2024

New sanctions legislation | UK updates Russian import sanctions guidance | Update to financial sanctions enforcement and monetary penalties guidance

New sanctions legislation

The Sanctions (EU Exit) (Miscellaneous Amendments and Revocations) Regulations 2024 was approved by Parliament during the "wash up" period of legislation following the general election announcement. The regulations, which came into force on 16 May 2024, make changes to a number of UK sanctions regimes (including Russia, Belarus and Syria) by introducing a prohibition on designated persons from acting as directors of UK companies, as outlined in the UK's sanctions strategy.

Following the election, the new Parliament will convene on 9 July 2024, followed by the State Opening and a King's Speech outlining the new government's agenda for the upcoming Parliamentary session. In the event that the Labour Party forms the next government, shadow foreign secretary, David Lammy, has said that the party will strengthen the UK's sanctions regime. This would include targeting professional enablers and launching a new whistleblower reward scheme, which aims to incentivise individuals to provide information that leads to the identification of assets belonging to sanctioned individuals and entities held within UK jurisdictions.

For more on the legislation dealt with during the wash up period, see our Insight.

UK updates Russian import sanctions guidance

The Department for Business and Trade (DBT) has updated its information on monitoring and enforcement and displaying supply chain history in its guidance on import sanctions imposed on Russian diamonds, and iron and steel. The guidance encourages organisations in all parts of the supply chain for third country processed diamonds, iron and steel imports to undertake the necessary due diligence to ensure compliance with the sanctions regime.

The notice to importers should be read alongside statutory guidance published by the FCDO. See an overview of the current import prohibitions in force.

Update to financial sanctions enforcement and monetary penalties guidance

The Office of Financial Sanctions Implementation (OFSI) has updated its financial sanctions enforcement and monetary penalties guidance:

  • OFSI will now, as a matter of policy assess all financial sanctions breaches in line with the latest version of the enforcement guidance;
  • providing clarification as to how OFSI will apply and split "case factors" that are used to assess suspected financial sanctions breaches; and
  • introducing two new case factors, "Knowledge, intention and reasonable cause to suspect" and "Cooperation".

Update to financial sanctions general guidance

OFSI has updated its financial sanctions general guidance to amend the following:

  • section 4.1 "Ownership and control", the example for ownership and control relating to individuals; and
  • definitions for extraordinary situations and expenses in the section on OFSI's approach to licensing grounds.

OFSI launches new FAQs

OFSI has published UK financial sanctions frequently asked questions (FAQs), a new form of additional guidance aimed at providing technical support on sanctions. OFSI encourages organisations and individuals to review the FAQs alongside its existing guidance and legislation, which take precedence.

There are currently FAQs relating to:

  • specific regimes and countries including Russia and Libya;
  • licensing;
  • Russian oil services ban; and
  • definitions.

OFSI states that FAQs will be published on an "as-needed basis", such as to support significant policy changes, new general licences, enforcement actions or in relation to wider implementation problems – see the press release. OFSI may also withdraw FAQs at its discretion, which will be listed on the government website.

New OFSI legal services general licence

A new general licence INT/2024/4671884 relating to legal services came into effect on 29 April 2024, it expires on 28 October 2023. The existing general licence INT/2023/3744968 expired on 28 April 2024 and has been removed.

The main changes to the general licence are:

  • the professional legal fees and expenses caps have been reset and users will be able to make use of the legal fees (£500,000 including VAT) and expenses caps (10% of the legal fees up to £50,000 including VAT) under Parts A and B of the general licence;
  • the professional legal fees and expenses caps now apply to each law firm instructed by designated persons to cover all matters on which the law firm is instructed;
  • Part B of the general licence now permits brief fees and refresher fees to be paid to counsel, where they are fixed fees and not subject to hourly rates;
  • the definition of counsel now includes barristers who are regulated by the Bar of Northern Ireland, and advocates who are regulated by the Faculty of Advocates (in Scotland).

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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