Authors

David de Ferrars

Partner

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Nick Storrs

Partner

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Nick Maday

Senior Associate

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Authors

David de Ferrars

Partner

Read More

Nick Storrs

Partner

Read More

Nick Maday

Senior Associate

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25 February 2022

The latest on sanctions relating to Ukraine

On 24 February 2022, the UK Prime Minister announced wide ranging sanctions in response to recent Russian actions in relation to Ukraine including: asset freezes on major Russian banks, individuals, and Russian entities; new legislation to restrict access of the Russian government and private companies to UK financial and capital markets and services; an immediate suspension of export licences for the export of dual-use items into Russia; a ban on Aeroflot vessels landing in the UK; bank deposit restrictions for Russian nationals; new legislation to prohibit the export of dual-use items to Russia; and sanctions on Belarus.  

The Prime Minister has also announced the establishment of a "Kleptocracy Unit" within the National Crime Agency and the bringing forward of reading of the Economic Crime Bill, which includes new transparency measures for UK firms and property and new measures related to Unexplained Wealth Orders (UWOs). Both these measures are intended to enable the UK regulators to better target sanctions evasion. 

The position vis-à-vis Russia is rapidly evolving, and the UK government's announcements have not yet been translated to legislation or official designations. Even so, individuals and companies that regularly deal with high-net-worth individuals and Russian entities would be well advised to be watching developments and reviewing their internal procedures to ensure that they are not caught afoul by new designations and restrictions as they arise in the UK or internationally.  

Alongside the Prime Minister's announcements, the Office of Financial Sanctions Implementation in HM Treasury (OFSI) has immediately designated several new individuals and Russian entities as subject to UK asset freezes under the existing framework for sanctions related to Ukraine in the Russia (Sanctions)(EU Exit) Regulations 2019.  This followed the OFSI's designation of three individuals and five Russian domiciled banks as subject to an asset freeze earlier in the week on 22 February 2022. 

Those recently designated as asset freeze targets by the OFSI include:

  • Boris Rothenberg, Igor Rothenberg, Gennady Timchenko, Denis Alexandrovich Bortnikov, Petr Fradkov, Elena Alexandrovna Georgieva, Kirill Nikolaevich Shamalov, Yury Slyusar.  Each of whom have also been designated as subject to travel ban to the UK.
  • Six Russian domiciled banks: Bank Rossiya (or Bank of Russia/Russia Bank),  JSC Black Sea Bank for Development and Reconstruction, JSC CB IS Bank (or Industrial Savings); JSC Genbank, PJSC Promsvyazbank, and VTB Bank.
  • Five Russian companies JSC United Aircraft Corporation (JSC UAC); PJSC United Shipbuilding Corporation (PJSC USC);  The Russian State Corporation for the Promotion of the Development, Manufacture and Export of High Technology Products (Rostec); JSC Research and Production Corporation UralVagonZavod; and JSC Tactical Missiles Corporation (TMC).

As asset freeze targets, the UK prohibits persons from knowingly dealing with the funds and other economic resources owned, held, or controlled by the designated persons without a licence issued by OFSI or in certain limited exceptions.  

Dealing with the funds or economic resource of an asset freeze target in breach of sanctions can have serious consequences, even if the breach is inadvertent.  In addition to criminal penalties punishable by conviction and the reputational damage of dealing with a sanctioned individual or entity, the OFSI has the power under the Policing and Crime Act 2017 to impose monetary penalties for breaches of sanctions up to a maximum of the greater of £1,000,000 and 50% of the estimated value of the relevant funds or resources involved.   While the OFSI has issued few monetary penalties since 2017, it has demonstrated a willingness in recent years to issue substantial penalties for breaches of the Russia (Sanctions)(EU Exit) Regulations 2019. 

The UK government's announcement and the OFSI's recent designations have also been accompanied by the announcement and imposition of varying restrictive measures in the USA, the European Union, Australia, Canada, and Japan.  Those restrictions include new restrictions on trade and investment with the Donetsk and Luhansk oblasts, further limitations on the Russian government's access to international financial and capital markets and services, and asset freezes on members of the Duma of the Russian Federation, high-profile and high-net-worth Russian nationals, and Russian entities with connections to the Russian government. 

Over the coming days and weeks, we expect that further restrictions will be adopted both in the UK and abroad, and that the sanctions and other restrictive measures put in place by the UK government in response to Russia's actions will substantially converge with those of its international partners.  

We will be continuing to monitor the restrictions as they develop.  If you would like to know more about what the recent sanctions and restrictions may mean for you, please feel free to reach out to a member of our team

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