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Home News UK government bans trust services for designated Russian persons [STEP UPDATE - Thursday, 05 January 2023]
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UK government bans trust services for designated Russian persons [STEP UPDATE - Thursday, 05 January 2023]

06/01/2023

The latest round of financial sanctions against Russia, introduced on 16 December 2022, prohibits the provision of trust services to any designated person or anyone connected with Russia, unless the services were already being provided immediately before the regulations came into force.

The following is extracted from a STEP article posted on the 5/01/2023

The Russia (Sanctions) (EU Exit) (Amendment) (No. 17) Regulations 2022

  • Expand on similar regulations introduced in October 2022, which omitted the export ban on Russian access to transactional legal advisory services previously promised by the government following the EU's adoption of similar prohibitions.
  • That omission has now been remedied by the new amendment.

DEFINITIONS - TRUST SERVICES

The new regulations define trust services as

  • Trust creation,
  • Provision of offices,
  • Management of a trust and
  • Acting as trustee of a trust or arranging for another person to so act.

DEFINITIONS - RUSSIA CONNECTIONS

  • An individual is considered to be 'connected with Russia' if they normally live in or are located in Russia.
  • Corporate bodies are connected with Russia if they are incorporated or constituted under Russian law or domiciled in Russia.

UK DIFFERS FROM EU

  • The regulations have some important differences from the EU's sanctions,
    • Which focus on the nationality or residence of a trust's settlor or beneficiary.
  • Notably, the UK's rules specify
    • That a private individual who is a Russian national but is resident elsewhere will not automatically be considered connected with Russia for these purposes.
  • Russian nationals or citizens who are no longer resident or located in Russia will therefore NOT BE CAUGHT by the UK rules, although the grandfathering is not allowable in the case of the 'designated person' prohibition, where pre-existing trust arrangements will be caught.

CATHERINE DE MAID TEP, PARTNER AT LAW FIRM BURGES SALMON COMMENTED

  • 'Where a Russian national visits Russia for any period of time, there is some uncertainty about whether or after how long they would be considered to be “located in” Russia and therefore connected with Russia',
  • [She also noted that] the UK sanctions WILL NOT APPLY to trust services provided under an existing relationship immediately prior to the regulations coming into force on 16 December 2022,
    • So that unlike the EU sanctions they are forward-looking only.
  • However, [said de Maid], there remains doubt as to whether providing new or additional trust services in relation to an existing trust structure would fall under the 'ongoing arrangement' grandfathering clause and be protected in the same way, or whether new work would be considered a separate instruction.

THE OFFENCE AND LICENCE

  • Contravening the regulations will constitute an offence, as will intentionally participating in activities that are intended to directly or indirectly circumvent the prohibitions.
  • Special licences to act may be sought from the Office of Financial Sanctions Implementation (OFSI)
    • In 'extraordinary situations', or
    • For cases involving humanitarian assistance activity, medical goods or services, food, diplomatic missions, safety and soundness of a firm, financial regulation, financial stability or unauthorised unit trusts.

NEXT UPDATE

  • STEP’s UK Technical Committee are in the process of preparing guidance for members on these sanctions and their impact, which will be released shortly.

SOURCES

STEP ARTICLE =

UNITED KINGDOM

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As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.  

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As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.