Sanctions tracker – new year, new sanctions guidance

With the new year underway, the UK's Office of Trade Sanctions Implementation ("OTSI") has issued new guidance providing a timely reminder of the risks of sanctions circumvention, and mitigation steps that can be taken in this regard. This post provides an overview of the new guidance, as well as a round-up of other recent UK sanctions developments.

New guidance on sanctions evasion

In its "Countering Russian sanctions evasion – guidance for exporters" OTSI has provided new guidance intended to support UK exporters in understanding Russian circumvention practices, and in reducing the risk of their business being targeted by those seeking to evade sanctions. The guidance lists various items considered to be at risk of diversion to Russia, third countries identified as jurisdictions from which entities may re-export sensitive items to Russia, and potential red flag indicators of export control and sanctions evasion. The guidance also provides information on due diligence best practices and useful screening tools.

OTSI has also published supplementary guidance for those involved in the export and making available of critical items in order to support businesses wishing to insert a "no re-export to Russia" clause into relevant contractual documentation.

The UK does not mandate the inclusion of such a clause (unlike the EU, which requires the inclusion of such a clause in certain circumstances), but the guidance notes that including such a clause in export documentation could reduce the risk of a customer involving UK businesses in activity which may be deemed to be a breach of sanctions.  

New Russia designations

In late December, the UK announced the designation of two Russian energy sector companies and the specification of a further 20 "shadow fleet" vessels said to be involved in the transportation of Russian oil. This followed a wave of prior designations targeting both the shadow fleet and the perpetrators of forced deportation of Ukrainian children in November, to mark 1,000 days since the invasion of Ukraine (see announcements here and here for further detail) .

The UK also announced the designation of five individuals (across the Russia, Democratic Republic of Congo and Global Anti-Corruption regimes) said to be involved in the illicit gold trade, which indirectly provides revenue to the government of Russia and which is considered to be a means for Russia to launder money and evade sanctions.

Operation Destabilise

In December, the National Crime Agency (the "NCA") announced an international NCA-led investigation ("Operation Destabilise") into Russian money laundering networks supporting serious and organised crime. The investigation identified two Russian-speaking networks, following which the US Department of the Treasury's Office of Foreign Assets Control ("OFAC") imposed sanctions on related individuals. The NCA has said that the money laundering scheme allowed Russian elites and designated individuals to access Western economies that would otherwise be denied to them as a result of sanctions or other financial restrictions.

UK-US partnership

The Office of Financial Sanctions Implementation ("OFSI") has recently published a blog on the annual technical exchange between OFSI and OFAC, marking the second anniversary of the Enhanced Partnership between the two bodies.

OFSI said that this year has marked a significant milestone as the relationship moves from establishing a shared understanding, to developing critical solutions to common problems via ongoing communication. Both OFSI and OFAC are said to have made significant progress on new initiatives to support sanctions implementation by the private sector – the blog highlights the updating of OFAC's "baseline" FAQs on general sanctions issues, and the introduction of FAQs by OFSI (among other developments).

Updated general licence

OFSI has made an amendment to General Licence INT/2022/1280876 relating to the insolvency of VTB Capital. The amendment adds a new condition that no funds or economic resources shall be made available to VTB Bank PJSC or any person to whom VTB PJSC may have transferred (or may in the future transfer) its claim in the insolvency proceedings of VTB Capital plc without first deducting the value of any VTB Capital plc assets which have been or are subject to VTB Bank PJSC enforcement action, and certain other receivables; and statutory interest should not be paid for any time over which distributions are not paid because of these deductions.