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Feb 2022 Russian sanctions – what you need to know


On 10 February 2022, the UK government published the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022.

The new legislation, which is now in force, amends the designation criteria under Regulation 6 of the Russia (Sanctions) (EU Exit) Regulations 2019.

The package follows the statement given by the Foreign Secretary in the House of Commons on 31 January in response to Russia's continued military presence around Ukraine and threats of invasion.

It is important to note that as yet, no designations have been made under the new legislation. Therefore, it remains to be seen what new sanctions will be imposed against Russia, if any.

Existing sanctions

In early 2014, Russia illegally annexed the Crimean peninsula in Ukraine. In response, members of the international community, including the UK, took a wide range of measures against Russia, which fell short of comprehensive countrywide sanctions being imposed.

These measures included asset freezes on those identified as being involved in destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.

There are also sectoral financial sanctions that prohibit and restrict specified activities, including restrictions on dealing with transferable securities or money-market instruments and granting (or entering into arrangements to grant) loans or credit.

These measures remain in place.

The new framework

The Foreign, Commonwealth and Development Office has described the new framework as "the strongest sanctions regime the UK has had against Russia."

The new legislation widens the scope of the UK government's powers to designate Russian individuals and entities, by expanding the definition of an "involved person".

In addition to the existing power to designate any person involved in destabilising Ukraine, undermining or threatening Ukraine's territorial integrity, sovereignty or independence, the UK government now has the power to designate:

  • Any person supporting or obtaining a benefit from the Government of Russia;
  • Any person owned or controlled directly or indirectly by such involved persons;
  • Any person acting on behalf of or at the direction of such involved persons; and
  • Anyone who is a member of or associated with such involved persons.

Definitions of "being involved in obtaining a benefit from or supporting the Government of Russia."

The language of this definition is unprecedentedly broad, meaning that the UK could target any person affiliated with, deemed to be of economic significance to, or operating in a sector of strategic significance to the Government of Russia.

It also includes persons owning or controlling, directly or indirectly, or working as a director (whether executive or non-executive), trustee, or equivalent, of such target entities.

Whilst the legislation goes on to define what constitutes an affiliate and sectors of strategic importance, it is noted that there is no further explanation of what would be deemed a business of economic significance.

Definition of "Government of Russia"

This definition is also expansive and includes all conceivable branches of the Government, including

  • The Presidency;
  • Public bodies and agencies subordinate to the President (including the Administration of the President);
  • The Chairman and deputies of the Chairman of the Government;
  • Any Ministry;
  • Any other public body or agency of the Government, including armed forces and law enforcement; and
  • The Central Bank of Russia.

Definition of "Government of Russia-affiliated entity."

In addition to including any entity which is owned or controlled directly or indirectly by the Government of Russia, it also includes entities in which a minority interest is held.

This broadens the existing ownership and control thresholds which are currently in place under Regulation 7 of the Russia (Sanctions) (EU Exit) Regulations 2019.

The definition also includes any entity which receives or has received financing from the Russian Direct Investment Fund or the National Wealth Fund or otherwise obtains a financial benefit or other material benefits from the Government of Russia.

There is no further explanation as to what would constitute either a financial or material benefit.

Target sectors

The following sectors have been identified as being of "strategic importance" to the Government of Russia:

  • Chemicals;
  • Construction;
  • Defence;
  • Electronics;
  • Energy;
  • Extractives;
  • Financial services;
  • Information, communications and digital technologies; and
  • Transport.

Persons who operate in these sectors of the Russian economy may find themselves the target of any new sanctions in respect of Russia.

Other measures

Whilst the legislation is the principal measure the UK government will use to place pressure on Russia, other instruments such as the long-awaited Economic Crime Bill, a review of Tier 1 (so called "golden visas") that have been granted to hundreds of Russians, and possible further measures in relation to the Nord Stream 2 pipeline are expected to play a role in encouraging Russia to de-escalate.

The associated press release from the FCDO can be viewed here.

Next steps

It remains to be seen how robustly the UK government will exercise these new powers.

Given that no designations have yet been made under the new framework is not possible to conclusively determine the persons or entities that may be targeted. However, there is no doubt that the pool of potentially "high risk" customers and counterparties is now significantly wider.

Clients that operate in Russia have affiliations with, or exposure to Russian entities should consider whether they, or any transactions they carry out, could be within scope for future designations and devise contingency plans as appropriate.



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