Sanctions tracker: recent UK sanctions developments

In this post we provide a round-up of recent developments regarding the UK's sanctions against Russia, including new designations, additional general licences and further guidance on sanctions compliance.

New designations

In recent weeks, the UK has continued to incrementally increase its asset freezing measures against Russia with new rounds of designations, as summarised below.

• The UK has announced the imposition of sanctions on 56 new targets with the intention of disrupting the supply of military equipment to Russia, and including Russian-backed mercenary groups operating in Sub-Saharan Africa and entities based in China, Turkey and Central Asia involved in the supply and production of goods. This is described as the UK's largest sanctions package against Russia since May 2023. The relevant designations were made under the UK's Russia, Central African Republic, Libya, Mali, and Chemical Weapons regimes.
• Six "interference actors" (three Russian agencies, and three leaders of the Social Design Agency) were listed on grounds of attempting to undermine and destabilise Ukraine and its democracy.
•  The UK added Rusgazdobycha JSC to the designated persons list, whilst also imposing sanctions on 18 oil tankers and four LNG tankers in a measure described as the largest package of sanctions to date against Russia's "shadow fleet". This followed the previous "specification" of five LNG vessels and the designation of two entities involved in the shipping of Russian LNG.
• Russian troops, defence laboratories and related individuals have been designated under the UK's Chemical Weapons regime for their role in the deployment of chemical weapons in Ukraine.
• The UK has added 16 members of the Russian cyber gang "Evil Corp" to the designated persons list.

OFSI updates financial sanctions FAQs

The Office of Financial Sanctions Implementation ("OFSI") has continued to update its frequently asked questions on financial sanctions.

A new FAQ (number 122) has been published in relation to the UK's trust services sanctions, dealing with the meaning of the terms "located" and "ordinarily resident" in Russia. OFSI have also added new FAQ 121 in the general licensing section of the FAQs. This relates to whether UK sanctions are engaged when internal settlements of Russian securities are undertaken between sub-accounts at a non-designated financial institution or central securities depository.

OFSI have also amended a number of FAQs (FAQs 49-51, 55, 61-66, 72-73, 76 and 84) to reflect the introduction of a new legal fees general licence ("GL") – discussed in more detail below.

HMRC issues compound settlement offer to UK exporter re breach of Russia sanctions

On 4 November, HM Revenue & Customs ("HMRC") announced that it had issued a compound settlement offer to a UK exporter in respect of the export of goods in breach of the Russia (Sanctions) (EU Exit) Regulations 2019 (the "Russia Regulations"). The settlement in question was for £58,426.45 and was paid in August 2024.

Since February 2022, HMRC has issued six compound settlements against UK companies that have breached the Russia sanctions regulations, totalling £1,363,129.

Removal of trade services licensing ground

On 30 September, the Department for Business & Trade announced that, following a review of the professional and business services sanctions in the Regulations, the government had determined to remove the provision of services from UK parent companies (and their UK subsidiaries) to their Russian subsidiaries as a licensing consideration in the UK's Russia statutory guidance. Inclusion in the guidance indicates that the relevant purpose is likely to be considered as consistent with the aims of the Russia Regulations, such that a licence could be granted.

This change was effected on 31 October 2024. Although the Secretary of State retains discretion to grant licences even where no licensing consideration is stated in the guidance, any company now wishing to provide intra-company services to Russian subsidiaries will need to explicitly demonstrate how the provision of those services aligns with the overarching purpose of the Russia sanctions regime.

This change does not impact licences for the provision of such services which have already been granted.

New general licences

OFSI has updated the available GLs in respect of financial sanctions, including in respect of the following:

• issuance of a new legal fees GL (INT/2024/5334756) to replace the prior GL on this topic, which expired in October 2024;
• a new GL (INT/2024/5294388) regarding government debt payments. This applies to all UK autonomous regimes (but excluding UN designated persons) and permits the making of payments by the UK government by or under UK government debt where the recipient of that payment is a designated person, provided the payment is made into a frozen account; and
• a new GL (INT/2024/5394840) permitting financial institutions to process payments to non-designated institutions where those payments had been received and blocked during 2022 and which had at some point in the payment chain been processed by a designated person (albeit where both the original sender and intended recipient of the payment are not designated).

Companies seeking to rely on these new GLs should carefully review the relevant GL's scope, and any applicable reporting and record-keeping requirements.

New trade sanctions guidance

The G7 has recently published industry guidance on export control and sanctions evasion. This includes: (i) a list of items which pose a heightened risk of being diverted to Russia, (ii) updated red flag indicators of potential export control and/or sanctions evasion, (iii) best practices for addressing these red flags, and (iv) screening tools and resources to assist with due diligence, comprising links to relevant sanctions lists and guidance.

The Price Cap Coalition has also published an advisory for the maritime oil industry and related sectors to provide recommendations on compliance with the oil price cap.