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

In this post, we summarise recent UK and EU developments regarding sanctions.

UK

New Belarus legislation

On 8 June, the UK published the Republic of Belarus (Sanctions) (EU Exit) (Amendment) Regulations 2023 (the "Amending Regulations") which amend the UK's existing sanctions against Belarus (contained in the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 (the "Belarus Regulations")). We summarise below the key provisions of the Amending Regulations.

• The Amending Regulations update the designation grounds contained in the Belarus Regulations to encompass those working for, or affiliated to, the Government of Belarus in various capacities (as set out in regulation 6(3B) of the Belarus Regulations). The Amending Regulations also extend the grounds for designation to those who obtain a financial or other material benefit from "involved persons" (who meet the criteria for designation), or who are immediate family members of an involved person.
• The list of goods which may not be exported to Belarus has been expanded to include banknotes and certain other categories of items such as "machinery-related goods" and "chemical weapons-related goods".
• Amendments have been made to the list of goods which may not be imported from Belarus to include cement; gold, gold jewellery and processed gold; rubber; and wood.
• The Amending Regulations also introduce internet-related restrictions, providing as follows:
  • a person who provides a social media service must take reasonable steps to prevent content generated on, or uploaded or shared to, the service by a designated person from being encountered by UK users;
  • a person who provides an internet access service must take reasonable steps to prevent UK users from accessing an internet service provided by a designated person; and
  • a person who provides an app store must take reasonable steps to prevent UK users from downloading or otherwise accessing an internet service provided by a designated person.

In common with the equivalent Russia-related restrictions, "designated person" refers in this context to those persons specifically designated for the purposes of these internet restrictions and not to all Belarusian asset freeze targets.

At the time of writing, no new Belarus-related designations had been made by the UK.

The Amending Regulations also make other minor amendments to the Belarus Regulations, described by Foreign Secretary James Cleverly as "applying measures to Belarus which we have already applied to Russia to close loopholes and address sanctions circumvention".

High Court grants order for payment into court enabling company to redeem loan notes held by sanctioned entity

In a judgment which will be of particular interest to financial institutions following case law developments involving sanctioned entities, the UK High Court has granted an order for moneys to be paid into court in circumstances where a company wished to redeem loan notes before their maturity date due to a proposed refinancing but had been prevented from paying the sums to the holder of those notes in light of UK, EU and US sanctions.

For further detail, please see this post from our Banking Litigation colleagues.

Amendments to general licences ("GLs")

On 6 June, the Office of Financial Sanctions Implementation ("OFSI") announced amendments to two existing GLs:

• GL INT/2022/2349952 (which permit transactions related to agricultural commodities) was amended to allow the Grain and Feed Trade Association to receive funds and economic resources in connection with its provision of services related to contracts for the trade in agricultural commodities.
• GL INT/2022/1552576 (which permits the payment of arbitration costs in London Court of Arbitration ("LCIA") arbitrations) was amended to allow: (i) the payment of funds into the LCIA by representatives of designated persons; (ii) the transfer of funds (by designated persons for their representatives) to their legal representatives for onward payment to the LCIA to cover arbitration costs; and (iii) non-designated person arbitral parties to pay substitute deposits to the LCIA.

OFSI has also published a blog on the prior obligations GL referred to in our previous post.

Common High Priority Items List

On 30 May, the Foreign, Commonwealth & Development Office (the "FCDO") published a note on its Common High Priority Items List. This list sets out items critical to Russia's weapons systems and military development and will be updated from time to time.

The FCDO states that Russia is seeking to procure items such as those on the list via third countries and that businesses should therefore ensure that they consider these risks and, in particular, undertake due diligence to ensure that the end destination of such products is not Russia.

Trusts services restrictions

The UK introduced restrictions on the provision of trusts services in December 2022 (see our previous post for a summary). Following the implementation of these restrictions, OFSI has engaged with over 500 stakeholders and international partners and has recently published a blog which aims to provide further clarity on themes arising from questions OFSI has received (with the usual disclaimer that OFSI does not provide legal advice).

The blog provides further detail on the application of the trusts restrictions (for example noting that individuals who occasionally travel to Russia while being normally resident or located in the UK will not generally be in scope), and also provides further information on exceptions and licensing regarding these restrictions.

EU 

New EU designations

On 5 June, the European Council announced the imposition of asset freezing restrictions on nine individuals under its Global Human Rights sanctions regime, for their involvement in the sentencing of Russian opposition politician Vladimir Kara-Murza.

On the same day, Council Regulation (EU) 2023/1089 amended Regulation (EU) No 269/2014 to expand the designation grounds in place under the EU's Russia regime so as to permit the designation of leading business people operating in Russia, their immediate family members or other natural persons benefiting from them, and businesspersons, legal person, entities or bodies involved in economic sectors providing a substantial source of revenue to the Government of the Russian Federation.

The EU has also recently listed seven individuals under its new Moldova regime (and the existing Russia regime) for their destabilising actions, and for undermining the territorial integrity of Ukraine.

Regular updates on sanctions and other developments that may impact businesses with interests or operations in Ukraine and/or Russia are available on our FSR and Corporate Crime Notes blog here.