On 4 March 2024, the UK Foreign, Commonwealth and Development Office (“FCDO”) published a Post-Legislative Scrutiny Memorandum (the “Memorandum”) for the UK Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”).
The Memorandum (available here) provides an assessment of the functioning of SAMLA and UK sanctions regimes underpinned by SAMLA, following the UK’s introduction of an autonomous sanctions framework post-Brexit.
The Memorandum covers a broad range of areas relating to SAMLA and the UK’s sanctions framework, including the following points in particular:
- The Memorandum includes a table with details of the range of thematic and geographic sanctions that have been introduced under SAMLA,
- In relation to designations, the Memorandum notes that “UK sanctions designations and specifications are carefully designed, are based on information from a range of sources, and are legally reviewed to ensure they are robust“.
- The Memorandum provides summaries of the roles of the UK Office of Financial Sanctions Implementation (“OFSI”), the Department for Business and Trade (“DBT”), and other authorities under the UK’s sanctions framework. The Memorandum also provides a short summary of the incoming role of the Office of Trade Sanctions Implementation (“OTSI”) (as previously discussed in our recent blog post here), noting that this authority will be “responsible for enforcing certain trade sanctions by investigating potential breaches and issuing civil monetary penalties“.
- The Memorandum notes that HM Revenue and Customs (“HMRC”) “undertakes a preliminary assessment into all credible intelligence and allegations of trade sanctions offences“, and “collaborates with other government departments and has a range of enforcement options available such as education, warning letters, issuing compound settlements, seizures and disruptions, and, in the most serious cases, referral to the prosecuting authorities“. The Memorandum notes that since the end of the Brexit Transition Period, HMRC has imposed 43 financial settlements for sanctions and export control offences, with a total value of over £9.4 million.
- The Memorandum notes that SAMLA has “successfully ensured that following the UK’s exit from the EU there was no disruption to the UK’s compliance with its UN sanctions obligations and no disruption to the UK’s commitment to working effectively with European and international partners to tackle shared foreign policy challenges“. The Memorandum also notes that the legislation “has given the government sufficient flexibility to tailor and use sanctions in a broad range of specific foreign policy contexts“.
- The Memorandum contains short summaries of noteworthy UK court cases where parties have challenged designations that have been made under SAMLA.
- In respect of section 44 of SAMLA, which provides a statutory defence against civil claims where a party reasonably believes that they were acting in compliance with UK sanctions, the Memorandum notes that “[t]he purpose of this section is to protect people from any adverse results generated by compliance with sanctions“. The Memorandum subsequently discusses the case Celestial Aviation Services Limited v Unicredit Bank AG, London Branch [2023] EWHC 1071 (Comm), and notes that the High Court emphasised in the judgment that “reliance on section 44 of SAMLA as a defence in litigation requires a party to establish both that they believed their act or omission complied with a prohibition under sanctions regulations and that such a belief was a reasonable one“.
- The Memorandum also includes a summary of key provisions under SAMLA relating to money laundering compliance.
Russia case study
The Memorandum provides a case study of how the UK has used the powers under SAMLA to impose enhanced sanctions against Russia. This includes statements that the UK has now imposed designations on over 1,900 parties, and that sanctions measures have deprived Russia of over $400 billion. The Memorandum notes that the UK has designated over 30 individuals and entities in third countries, as part of its efforts to crack down on Russia sanctions evasion.
OFSI Sanctions Strategy
Alongside the Memorandum, OFSI has also recently published a sanctions strategy document, providing details on OFSI’s role and the UK government’s policy approach towards the implementation and enforcement of sanctions (as discussed in our earlier blog post here).
