On 5 September 2024, the UK amended the scope of its Russia sanctions relating to the provision of certain legal advisory services to non-UK persons, as contained in Regulations 54D and 60DB of The Russia (Sanctions) (EU Exit) Regulations 2019 (“UK Russia Regulations”), via The Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2024 (the “Amending Regulation”).
The Amending Regulation entered into force on 6 September 2024, in short (i) clarifying the knowledge a person must have before the legal services restriction applies, and (ii) amending the exceptions to the restriction and the definition of “legal advisory services”. As a result of these changes, the General Licence relating to Regulation 54D is no longer required and has been revoked.
The Amending Regulation comes as a response to issues raised by the legal and compliance community when the legal services restrictions in Regulation 54D were first introduced in June 2023, including in particular the impact on UK persons and UK-based teams providing advice on non-UK compliance laws (e.g., EU or US sanctions). For further detail on the issues raised by the original restriction and the corresponding General Licence, please see our previous blog posts here and here respectively.
Refined scope / clarifications
Key amendments include the following:
- Knowledge threshold added to the offence in Regulation 54D: Regulation 54D has been amended so that the legal advisory services offence now only prohibits the provision of legal advisory services, directly or indirectly, to non-UK persons in respect of conduct outside the UK where “knowing that the object or effect of the services” is to enable or facilitate activity which would be prohibited under UK sanctions (i.e. if the activity was conducted by a UK person or was taking place in the UK). This narrows the offence to more closely align it to the separate anti-circumvention and facilitation offence within the UK Russia Regulations. Previously, legal advisory services were prohibited where provided “in relation to or in connection with” a relevant activity. As a result of this change, the previously available knowledge-based defence has been removed.
- Expansion and clarification to the exceptions in Regulation 60DB: Regulation 60DB previously included an exception for sanctions compliance advice given in relation to the UK Russia Regulations, but did not include an exception for advice relating to other UK sanctions regimes, any non-UK sanctions, or any other compliance laws (e.g. export controls, anti-bribery or anti-money laundering laws). This was a gap which the General Licence sought to address, allowing UK persons to register and provide certain broader compliance advice in accordance with its terms. Now, as a result of the Amending Regulation, Regulation 60DB permits legal advisory services relating to compliance with any UK or non-UK sanctions, Russian counter-measures, and any criminal legislation imposed by any jurisdiction. The change has now made the General Licence redundant, thus it was revoked on 6 September 2024.
- Changes to the definition of “legal advisory services”: Finally, the Amending Regulation tweaks the definition of legal advisory services in Schedule 3J to the UK Russia Regulations to confirm that the restriction does not prohibit: (i) representation or advice in any proceedings before administrative agencies, courts or other duly constituted official tribunals in any jurisdiction; or (ii) legal advice or other services in connection with (re)insurance claims management.
Impact
If you were previously registered for, and relying on, the General Licence you will no longer need to do so as the amendments capture the scope of the General Licence. However, please note that you will still be required to keep existing records relating to use of the General Licence prior to its revocation.
Whilst the scope of Regulation 54D has now been clarified and narrowed, those providing commercial advice (rather than compliance or litigation advice) relating to activity in Russia or involving Russian sanctioned parties, trade to/from Russia, or trade in Russian origin goods should still carefully consider whether such advice is captured by the updated legal advisory services restriction (or by the broader UK sanctions measures, including as regards facilitation).
