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The United Kingdom is imposing new sanctions on Russia almost daily in response to the ongoing and deteriorating situation in Ukraine. The newest measures include asset freezes, economic prohibitions and other trade and financial restrictions. In this piece, we provide an update on the latest sanctions since our previous alert as well as an overview on the impact of these sanctions on businesses.
Timeline of UK financial and economic restrictions against Russia
The Russia (Sanctions) (EU Exit) Regulations 2019 (2019 Regulations) is the key legal act setting out UK sanctions against Russia (as retained under UK law following Brexit). Although the 2019 Regulations originate from European law, there has been significant divergence between the scope of UK and European Union (EU) sanctions. As of 3 March 2022, there have been five amendments to the 2019 Regulations in response to Russia’s actions. These amendments expand the scope of the existing restrictions and impose new ones. They are as follows:
OFSI General Licenses
The UK Office of Financial Sanctions Implementation (OFSI), which is responsible for implementing and enforcing financial sanctions in the United Kingdom, published a number of General Licenses authorising certain acts (subject to specific conditions) which would otherwise be prohibited under the 2019 Regulations (as amended) to allow for persons affected to arrange their affairs and comply with the new restrictions. These include:
UK targeted sanctions
Since the start of Russia’s military activity in Ukraine, the United Kingdom has been regularly updating its list of individuals and persons subject to travel bans and asset freezes. Targeted entities include major Russian banks (such as VTB Bank, Sberbank and SovComBank), companies in key Russian sectors (such as United Aircraft Corporation and Rostec) and key Russian individuals (such as Denis Alexandrovich Bortnikov, deputy president and chairman of VTB Bank's management board, and Elena Alexandrovna Georgieva, chairwoman of Novikombank). The full list of designated persons is available here.
UK asset freezes apply to funds and economic resources owned, held or controlled by a sanctioned person as well as entities owned or controlled directly or indirectly by sanctioned persons. A non-sanctioned entity will be considered as being owned or controlled by a sanctioned person if: (i) the sanctioned person holds more than 50% of the shares or voting rights in the entity or has the right to appoint or remove a majority of the board of directors of the entity; and/or (ii) it is reasonable to expect that affairs of the entity are conducted in accordance with the sanctioned person’s wishes.
Impact for businesses
As the scope and variety of UK sanctions against Russia continues to increase, businesses will need to take swift action to limit their exposure.
The McDermott-based authors of this article are as follows: Raminta Dereskeviciute (London); Ludovica Rabitti (London) and Dr. Alexa Ningelgen (Düsseldorf)
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