On March 1 and 2, 2022, the UK published four Regulations which introduce new financial, trade and shipping sanctions against Russia.

New financial sanctions

The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 introduce the following restrictions:

  • Prohibition on dealing with securities or money-market instruments issued by, or providing loans/credit to a person connected with Russia (including Russian incorporated entities and residents) or the Russian Government.
  • The aforementioned prohibitions also apply to all entities listed in Schedule 2, now also including their UK subsidiaries. The following companies have been listed under Schedule 2 since 2014: Sberbank; VTB Bank; Gazprombank; Vnesheconombank (VEB.RF); Rosselkhozbank; OPK Oboronprom; United Aircraft Corporation; Uralvagonzavod; Rosneft; Transneft; and Gazprom Neft.  VTB Bank and VEB.RF have also now been subject to asset freezes under UK sanctions (see here and here).
  • Prohibition on UK credit or financial institutions from establishing or continuing a correspondent banking relationship and from processing sterling payments to, from or via , a “designated person” (currently applies only to Sberbank) or a credit or financial institution owned or controlled by them.

Note that the UK has issued certain General Licences (“GLs“) to allow the wind down of certain activities and GBP processing caught by these new controls. These include the following (each with specific scope and conditions which would need to be carefully reviewed before relying on them):

  • A wind down period up to 23:59 on 08 March 2022 in respect of the new sovereign debt, loans and money market instruments measures;
  • A wind down period up to 23:59 on 31 March 2022 in respect of the new clearing and correspondent banking prohibitions with respect to Sberbank; and
  • A wind down period up to 24 June 2022 in respect of the processing of sterling transactions to, from or via Sberbank for the purposes of making certain energy products available for use in the UK.

The Russia (Sanctions) (EU Exit) (Amendment) (No. 5) Regulations 2022 prohibit a UK individual or entity from providing financial services for the purpose of foreign exchange reserve and asset management to:

  • the Central Bank of the Russian Federation
  • the National Wealth Fund of the Russian Federation
  • the Ministry of Finance of the Russian Federation
  • a person owned or controlled directly or indirectly by any of the persons above; or
  • a person acting on behalf of or at the direction of any of the persons above.

New Trade sanctions

The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022 prohibit the following:

  • the export, supply, delivery and making available of dual-use goods and critical-industry goods.
  • the making available and transfer of dual-use technology and critical-industry technology; and
  • the provision of technical assistance, financial services, funds and brokering services in relation to dual-use goods and technology and critical-industry goods and technology.

Critical industry goods and technology include certain listed electronics, computers, telecommunications equipment, information security, sensors and lasers, navigation and avionics, marine and aerospace and propulsion (in each case with related software and technology also subject to controls).  This list is broadly aligned with a similar list enacted by the EU on 25 February (see previous blog post), building on equivalent US lists of such items.

A number of exceptions from the trade prohibitions on critical-industry goods and technology are provided for, in relation to personal items and diplomatic missions, consular posts and international organisations, the movement of aircraft and vessels, consumer communication devices and software updates.

New UK Shipping Sanctions

The Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2022 prohibit Russian ships, and other ships to be specified by the Secretary of State, from entering UK ports. The registration of ships on the UK Ship Register is also prohibited where they are owned, controlled, chartered or operated by a designated person or persons connected with Russia, or where they are a specified ship.

Author

Author

Author

Ross Evans is a Senior Associate in the EU, Competition and Trade team in London, who specializes in advising companies in the technology, telecoms, engineering, and fintech sectors on how to manage a rapidly changing landscape of competition/antitrust, trade law, and national security and investment regimes. He regularly advises clients in relation to UK public interest intervention rules and national security and investment issues, and on global foreign investment review strategy, leveraging his expertise in trade and export control laws and competition merger control regimes, and an in-depth understanding of emerging technologies.