On 20 June 2023, the UK enacted additional amendments to The Russia (Sanctions) (EU Exit) Regulations 2019 (“Russia Regulations“) through The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2023 (the “Amendment“). The Amendment makes two principal changes to the Russia Regulations by:
- expanding the “purpose” for which the Russia Regulations are imposed to include the promotion of compensation payment for damage, loss or injury suffered by Ukraine; and
- expanding the definition of “non-government controlled areas” in the Russia Regulations to include the non-government controlled areas of the Kherson and Zaporizhzhia oblasts in Ukraine, to reflect the changing geographic location of Ukrainian control.
The “purpose” of the Russia Regulations was previously limited to encouraging Russia to cease destabilising or undermining Ukraine’s territorial integrity, sovereignty or independence. As outlined in the Explanatory Memorandum to the Amendment, the expansion of the “purpose” is intended to enable certain Russian assets to remain frozen until compensation has been paid by Russia for its invasion of Ukraine. It reflects the policy position that Russia bears full responsibility for the war and damage caused, including to Ukraine’s critical infrastructure.
Expanding the definition of “non-government controlled areas” means that the pre-existing finance, shipping and trade sanctions imposed on the non-government controlled areas of the Donetsk and Luhansk oblasts now also apply to the non-government controlled areas of the Kherson and Zaporizhzhia oblasts.
The Amendment also introduces a knowledge defence to the strict liability offence for the export of prohibited or restricted goods under s68(1) of the Customs and Excise Management Act 1979, where a person had no knowledge or reasonable cause to suspect that the prohibited goods were destined for the non-government controlled areas of the Donetsk, Luhansk, Kherson and Zaporizhzhia oblasts.
Future Developments
The UK Government has also indicated in a press release on 19 June 2023 its intention to introduce a new “package” of measures including a “route” through which sanctioned individuals can release funds to support Ukraine’s reconstruction, as well as new reporting obligations for assets held in the UK on behalf of the Central Bank of Russia, Russian Ministry of Finance and Russian National Wealth Fund.
