To say that this has been a game-changing year in UK sanctions would be an understatement. Almost a year since the start of the conflict in Ukraine, BCL partner John Binns writes for LexisNexis reflecting on what the last year has taught us about how sanctions regulation and enforcement has developed and what to expect in the future.
”Scale and type of prohibitions
Primary legislation has been changed to make sanctions more draconian, including by:
- enabling civil penalties for sanctions breaches on a strict liability basis
- removing safeguards, including reports to parliament and periodic reviews
- ending the requirement for designations to be appropriate
- introducing an urgent procedure for people designated in other jurisdictions, and
- capping and restricting damages for people whose designations are overturned
Sanctions aimed at addressing Russia’s actions in Ukraine have massively increased in scope, expanding:
- criteria for designating persons, to include people carrying on business in certain sectors of the Russian economy and related parties
- broader financial sanctions, including on investments and loans involving designated persons
- (DPs) and persons ‘connected with Russia’ (PCRs), and
- the list of goods and services that may not be provided to Russia, DPs or PCRs
The government has signalled its intention to go further (including a still-awaited ban on ‘transactional legal services’) and to enforce sanctions via the Office for Financial Sanctions Implementation (OFSI) and a new Counter Kleptocracy Cell (CKC) of the National Crime Agency (NCA), while the Foreign, Commonwealth and Development Office (FCDO) have designated more and more individuals and entities, primarily on the Russia list.
OFSI has found it predictably hard to deal with the volume and complexity of licence applications, resulting in backlogs that have only partly been alleviated by the deployment of additional personnel and the belated granting of general licences (a notable feature of our post-Brexit framework) including for energy bills, insurance and legal fees.
Banks, lawyers and even courts have found it hard to wrestle with ambiguities in the terms of these licences, with the result (we may hope) that future licences, specific and general, will be clearer and more efficient.
Meanwhile, however, political attention to licensing of fees for defamation lawyers who wrote on behalf of unpopular clients threatens to shift the agenda from the reasonableness of fee levels to the merits of the claims DPs’ lawyers may seek to make—a risky judgement to ask OFSI to make, at least where the claim is against a fellow government department.
*This article was first published by LexisNexis on 14 February 2023.