Ukraine introduced martial law ending on 26 December 2018 in 10 regions of Ukraine bordering the Russian Federation, Belarus and Moldova’s Trans-Dniester area (Vinnytsia, Luhansk, Mykolaiv, Odesa, Sumy, Kharkiv, Chernihiv, Donetsk, Zaporizhia and Kherson regions), and in the internal waters of Ukraine in the Azov-Kerch water area.
On November 23, 2018 the Russian Government issued Decrees No. 1403, No. 1404, No. 1405 (“Decrees“), establishing the right of Russian banks and credit institutions that fall under foreign sanctions to not disclose certain information that is normally subject to mandatory disclosure requirements.
In particular, the Decrees prescribe such banks and credit institutions to provide information on its shareholders and UBOs only to the Central Bank of Russia and to give motivated explanations. The Central Bank of Russia is recommended to not disclose such information publicly.
According to the Russian Government, the above measures are intended to safeguard the interests of Russian banks and credit institutions that fall under sanctions imposed by foreign states.
The Decrees are expected to come into force on December 5, 2018.
Following the snap-back of US sanctions on 5 November 2018, Foreign and Finance Ministers from the UK, France, Germany and the EU published a joint statement in which they expressed their “regret” at the re-imposition of sanctions on Iran by the US and also reiterated their “aim to protect European Economic operators engaged with legitimate business with Iran”. These comments suggest that the EU is determined to continue economic relations with Iran and that the proposed Special Purpose Vehicle (“SPV“), announced by the EU on 24 September, is still under consideration.
Little detail has been forthcoming in terms of how the SPV would work operationally since the EU’s announcement regarding the decision to establish the SPV. At the time of the EU’s announcement, the SPV was described as a legal entity that would facilitate “legitimate financial transactions with Iran” in order to allow European companies to continue trading with Iran despite the threat of US sanctions. It was also suggested that the SPV may be opened to companies in other countries in order for them to engage in Iran-related transactions.
Practically, it is likely the SPV would engage in Iran-related transactions on behalf of companies and the SPV would therefore assume the risks that would otherwise be taken on by individual companies when engaging in Iran-related transactions. Furthermore, we envisage that the SPV would operate outside of the US dollar financial system, especially in light of the Trump administration’s comments on 2 November that the financial messaging service SWIFT could be targeted by sanctions for providing services to Iranian financial institutions. SWIFT has since announced that it will be suspending certain Iranian banks from accessing its messaging system.
However, it has been reported that the EU is struggling to find a country to host the SPV with reports indicating that Austria had refused. As such, the SPV appears to be a long way from creation.
The UK Foreign Affairs Committee has launched the “Global Britain: the future of UK sanctions policy inquiry” and is accepting written submissions up to the deadline of 14 December 2018. The inquiry is intended to explore and evaluate different options for the UK’s approach to sanctions policy after Brexit.
The inquiry therefore invites submissions on:
- The effectiveness of sanctions as an instrument of foreign policy, including examples of both successful and unsuccessful use of sanctions to influence the behaviour of foreign actors.
- The advantages and disadvantages of the EU’s approach to the use of sanctions, both generally and in specific cases (such as Russia).
- How the USA sets and uses sanctions as an instrument of foreign policy, and the advantages and disadvantages of its approach particularly where that differs from the EU.
- How the UK might best make use of the Magnitsky powers included in the Sanctions and Anti-Money Laundering Act 2018.
- The extent to which the UK should seek to align with the EU in sanctions policy post-Brexit, versus areas in which it may wish to diverge or seek stronger sanctions.
- The FCO’s record in:
- Identifying individuals, companies and regimes that should be sanctioned;
- Linking specific sanctions recommendations to broader foreign policy goals; and,
- Working with other departments, agencies and the private sector to share intelligence and implement sanctions effectively.
- The use of sanctions alongside other tools designed to combat dirty money, such as unexplained wealth orders.