Sanctions tracker – round-up of recent UK and EU developments

In this post we provide a summary of a number of recent developments regarding the UK and EU sanctions imposed on Russia.

UK

New UK sanctions legislation

On 20 April, the UK issued its first new Russia sanctions statutory instrument of 2023: the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023 (the "Amending Regulations"), which amend the Russia (Sanctions) (EU Exit) Regulations 2019 (the "Russia Regulations").

A summary of the principal changes effected by the Amending Regulations is set out below:

• the existing trade sanctions in the Regulations (which prohibit the export, supply or delivery of certain items to Russia) have been expanded to cover additional items used by Russia on the battlefield. The relevant goods have been added to a number of the existing schedules in the Regulations: critical industry goods, quantum computing and advanced materials goods, defence and security goods, G7 dependency and further goods, and Russia's vulnerable goods;
• the introduction of restrictions on the import of iron and steel products processed in a third country but which incorporate Russian origin iron or steel products;
• the addition of further items to the lists of iron and steel products and revenue generating goods which are subject to import restrictions under the Regulations; and
• the introduction of a prohibition on the supply and delivery of certain revenue generating goods from Russia to third countries.

The majority of the amendments came into force on 21 April 2023, but the new restrictions on third country iron and steel products will come into force on 30 September 2023.

The statutory guidance has also been amended to reflect the Amending Regulations and the Export Control Joint Unit has issued a Notice to Exporters.

Additional UK designations

On 12 April, the Foreign Commonwealth & Development Office (the "FCDO") announced a further package of Russia designations, targeting:

• two Cypriot "professional enablers" said to have knowingly assisted Russian oligarchs to hide their assets in complex financial networks;
• certain companies associated with Alisher Usmanov; and
• family members and other individuals associated with oligarchs and who are said to be used as proxies to hide their assets.

This reflects the UK government's stated aim of combatting kleptocracy and driving down sanctions evasion, as set out in the recently published Economic Crime Plan for 2023-2026.

The full list of newly designated persons is set out in HM Treasury's notice.

On 21 April, the FCDO announced the designation of five individuals connected to the poisoning and arrest of Vladimir Kara-Murza under the Russia and global human rights regimes. The HM Treasury notices in respect of these designations can be found here and here.

Amendment to legal fees general licence

The Office of Financial Sanctions Implementation ("OFSI") has issued a new version of its previous general licence ("GL") in respect of legal fees owed by individuals and entities designated under the Russia and Belarus sanctions regimes (see our previous post in relation to the original GL). The new GL (GL INT/2023/2954852)  came into force at 00:01 on 28 April and will expire on 28 October 2023.

Under the new GL, the previous caps on legal fees have been reset and users will therefore be able to make use of new fee caps of £500,000 when relying on the GL. The GL has also been redrafted to clarify that it may be used to start paying/receiving fees in cases where the total fees are expected to exceed the relevant cap, with a specific licence then required to license the balance of the fees. Fees relating to cases involving defamation or malicious falsehood may not be paid under the new GL; a specific licence application may be made in respect of such fees, but it is OFSI's starting position that the payment of fees in such cases will not be appropriate.

OFSI has published a blog post in relation to the new legal fees GL.

OFSI has also published a new GL (GL INT/2023/2883496) permitting the making of payments by Russian Railways (a designated person) to Lithuanian Railways in relation to passenger travel between the Kaliningrad region and other parts of Russia.

New OFSI guidance for high value dealers

On 18 April, OFSI published new guidance for high value dealers, luxury goods markets and art market participants (the "HVD Guidance").

The HVD Guidance sets out various circumvention typologies involving high value assets and risk factors for those involved in this sector to be aware of when carrying out sanctions due diligence. The HVD Guidance also contains a section on what that due diligence should look like, and best practice in this regard.

OFSI has also recently updated its guidance on the oil price cap.

EU

Additional EU designations

On 13 April, the Council of the EU announced the addition of Wagner Group and RIA FAN to its Ukraine-related designated persons list. (Wagner Group was already subject to asset freezing sanctions under the EU's global human rights sanctions regime).

The designations were effected by Council Implementing Regulation (EU) 2023/755, implementing Regulation (EU) No 269/2014.

New EU Moldova sanctions regime

On 28 April, the Council of the EU announced the introduction of a new sanctions regime relating to the Republic of Moldova. Under the new regime, the EU will have the power to impose sanctions on persons responsible for supporting or implementing actions which undermine or threaten the sovereignty and independence of the Republic of Moldova, as well as the country's democracy, the rule of law, stability or security. The Council's press release notes that efforts to destabilise the country have noticeably increased since the beginning of the war in Ukraine, and that the regime has been adopted at the request of the Republic of Moldova.

The new sanctions measures are contained in Council Regulation (EU) 2023/888 and came into force on 3 May 2023. At the time of writing, no individuals or entities had been designated under this new regime.

Amendments to Commission FAQs

The European Commission has continued to add to its Russia sanctions FAQs. In particular, the FAQs on the asset freeze have been amended to include further clarification on the new reporting requirements introduced in February (see our previous post for details).