Sanctions and Export Control | UK Regulatory Outlook January 2024

New trade and financial sanctions against Russia

On 14 December 2023, the UK government introduced its seventh trade sanctions package against Russia as well as a separate ban on the import of diamonds from Russia.

The legislation aims to prohibit the export of goods that carry a risk of being used in Russia's war on and invasion of Ukraine, and includes financial measures aimed at supporting businesses divesting from Russia. 

See the government's research briefing on sanctions against Russia.

OFSI updates correspondent banking restrictions and oil price cap

On 15 December 2023, Regulation 17A of the Russia (Sanctions) (EU Exit) Regulations 2019 was amended, prohibiting UK banks from processing payments previously processed by designated banks or which were intended for a designated bank. For further guidance, see the Office of Financial Sanctions Implementation (OFSI) blog-post update on correspondent banking restrictions.

On 20 December 2023, OFSI amended the record-keeping requirements within its oil price cap general licence, and updated its industry guidance for the maritime services ban and oil price cap accordingly.

New unit to crack down on sanctions evasion

On 11 December 2023, the government announced the creation of a new Office of Trade Sanctions Implementation (OTSI), which will be responsible for the enforcement of trade sanctions.

OSTI will also help businesses comply with sanctions, investigate potential breaches, issue civil penalties, and refer cases to HM Revenue and Customs (HMRC) for criminal enforcement where necessary.

There has been increased scrutiny of trade sanction circumvention – the National Crime Agency (NCA) recently issued an alert to financial institutions and the UK regulated sector warning of Russia's attempts to procure sanctioned goods and services through intermediary companies. A similar alert was issued in November 2023 with the aim of increasing awareness over Russia's use of gold as a means of undermining UK sanctions.

It is anticipated that the UK will continue to target items used to supply and fund Russia's war in Ukraine, such as machine parts and electronics. Between August and November 2023 alone, HMRC has issued compound settlement offers to three exporters totalling over £77,000, for unlicensed exports of dual use goods and breach of the Russia Regulations. See the full collection of notices to exporters collection.

New general licences for sanctioned Russian iron and steel and payments to local authorities

On 11 December 2023, the Department for Business and Trade introduced a new general trade licence for sanctioned iron and steel, which permits the import into the UK of goods otherwise prohibited under the Russia Regulations. 

The licence also permits the provision of services and actions related to the import of these goods. The licence implements record-keeping requirements and individual conditions for each of the three goods categories. The licence takes effect from 11 December 2023 and is of indefinite duration.

On 9 December 2023, OFSI issued a general licence under all UK Autonomous Sanctions Regulations, which allows permitted payments, including council tax as well as rates charged on domestic and non-domestic properties, to be made by or on behalf of designated persons. The general licence took effect from 9 December 2023 and is of indefinite duration.

OFSI will likely continue to focus its work on the Russian sanctions regime in the coming year: to date, there has been relatively little enforcement activity, but that is likely to change during 2024 as OFSI seeks to give teeth to the multiple measures adopted by the UK government and to make use of its growing powers.

See the full collection of OFSI general licences.