ASK MAT – PLEASE EXPLAIN UK Sanctions: Operational Restrictions vs Designation-Based Prohibitions

ASK MAT – PLEASE EXPLAIN UK Sanctions: Operational Restrictions vs Designation-Based Prohibitions

MAY SAYS:

• When people talk about UK sanctions, they often assume all restrictions work the same way.
• They don’t.
• The UK uses two different types of sanctioning mechanisms:

Below is a clear, simple explanation of what operational restrictions are in the UK sanctions system and how they differ from designation-based prohibitions.

TWO DIFFERENT TYPES OF SANCTIONING MECHANISMS: AS FOLLOWS

1. Designation-Based Prohibitions

• This is what most people think of as “sanctions.”
• A designated person is someone formally listed on the UK Sanctions List (UKSL).

If an individual or entity is designated:

✔ A full asset freeze applies = You must block their funds and economic resources.

✔ You must not make funds or economic resources available to them, = Including indirect or structural arrangements.

✔ Other sanctions may also apply

• Travel bans
• Trade restrictions
• Transport restrictions
• Aviation/maritime bans

✔ All firms must screen against these designations

• Designation lists trigger mandatory firm-wide sanctions screening.
• These are the strictest, legally binding prohibitions.

2. Operational Restrictions (Thematic Restrictions)

Different from sanctions designations.

• Operational restrictions apply to persons or entities that are not legally “designated,”
• But those who fall into certain risk categories are linked to specific regulations, especially in Russia.

They exist to manage specific activities, not to sanction the person. Examples include:

✔ Financial or investment prohibitions = Some individuals or entities appear on a Russia-specific list because they are connected to restricted financial or investment activities, but they are not sanctioned persons.

✔ Sector-based rules = These relate to industries, goods, technologies, and markets, not individuals.

✔ Activity-based restrictions: These limits:

• Lending
• Investment
• Dealings in sovereign debt
• Certain forms of access to UK capital markets

✔ They do not trigger asset freezes  = No requirement to block funds.

✔ They do not require firms to treat the person as “sanctioned”  = They require operational compliance, not a full sanctions prohibition.

These restrictions regulate what you can do, not who you can deal with. = Simple Comparison.

Why does the UK have both?

Because the UK wants:

1. A clear list of sanctioned persons → The UK Sanctions List (UKSL) — full legal prohibitions.
2. Additional sectoral or Russia-specific controls → Operational restrictions that support national security and foreign policy without sanctioning individuals.

These two systems operate in parallel.

In one sentence

• Designation-based prohibitions freeze assets and ban dealing with a person;
• operational restrictions only stop certain activities and do not sanction the individual themselves.