Russian sanctions update: key considerations for UK insolvency practitioners

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Introduction

The new Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024 introduce significant changes that impact insolvency practitioners.

Key updates

Licensing ground and payment conditions: From 5 December 2024, a new insolvency licensing ground permits the Office of Financial Sanctions Implementation (OFSI) to licence insolvency, restructuring and related proceedings, provided that any payments made directly or indirectly to a designated person are credited to a frozen UK bank account. This change should help to reduce the need for court applications in insolvency proceedings involving sanctions issues. Certain required payments, such as fees due to financial authorities, are permitted even when involving designated persons.
Reporting obligations: From 14 May 2025, insolvency practitioners will be subject to reporting obligations as “relevant firms” under financial sanctions regulations. A relevant firm is required to report to OFSI as soon as practicable if it knows or suspects that a person is a designated person or has committed a breach of financial sanctions regulations. If it knows or suspects that it hold funds for a designated person, it is required to provide an annual report to OFSI with the details of these assets. Where an insolvency practitioner undertakes business that does not constitute insolvency practitioner business – for example where it acts as a receiver or undertakes an independent business review – this is not subject to sanctions reporting obligations. OFSI has published new guidance for insolvency practitioners to provide further information on these upcoming reporting obligations for the sector.

These new rules introduce additional compliance responsibilities for insolvency practitioners. Understanding and adhering to these updated regulations is essential for maintaining compliance and avoiding penalties.