Sanctions and Export Control | UK Regulatory Outlook March 2024

UK government sanctions strategy paper

The Foreign, Commonwealth & Development Office (FCDO) has published a policy paper setting out the UK government's approach to using sanctions as a foreign and security policy tool.  The paper sets out several case studies illustrating the effectiveness of the UK sanctions regime, noting that as of October 2023, over £22 billion Russian assets have been reported frozen as a result of financial sanctions.

In order to deliver the strategy, the FCDO announced that:

• The new Office of Trade Sanctions Implementation (OTSI), which will be responsible for the implementation and civil enforcement of certain trade sanctions, will be operational in 2024. See more in our previous Regulatory Outlook.
• 2024 will see the introduction of a new type of prohibition to make it unlawful for a designated party under the UK's autonomous sanctions regimes to act as a director of a UK company.
• The FCDO is developing a voluntary process to allow sanctioned individuals to apply for sanctioned funds to be released for the purpose of supporting Ukraine's recovery and reconstruction.
• Legislation will be introduced "when parliamentary time allows" to create a humanitarian exception across the UK's financial sanctions, as set out in the 2023 white paper on International Development.

Treasury Committee inquiry into effectiveness of UK's Russia sanctions regime 

The Treasury Committee launched an inquiry on 29 February 2024 into the effectiveness of the UK's financial sanctions on Russia in impeding Russia's war effort against Ukraine. The call for evidence follows a 2022 report from the committee on the impact of economic sanctions on Russia.

The committee seeks views on the UK's financial sanctions on Russia, including the effectiveness of the work of OFSI and whether financial sanctions should be widened to include purchasers of Russian oil and gas.  The deadline for submissions is 28 March 2024.

Russia (Sanctions) (Overseas Territories) (Amendment) Order 2024

The Russia (Sanctions) (Overseas Territories) (Amendment) Order 2024 came into force on 14 March 2024. The order extends the Russia (Sanctions) (EU Exit) Regulations 2019 to all British overseas territories except Bermuda and Gibraltar.

Export Control (Amendment) Regulations 2024

The Export Control (Amendment) Regulations 2024 come into force on 1 April 2024, amending:

• Export Control Order 2008 Schedule 2 (military goods, software and technology), to implement technical updates made to the Wassenaar Arrangement munitions list.
• Export Control Order 2008 Schedule 3 (dual-use goods, software and technology), to introduce new export licence requirements for the export of equipment in relation to quantum technologies, cryogenic technologies, semiconductor technologies, additive manufacturing equipment and advanced materials.
• Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items (Recast) Annex 1 (dual-use goods, software and technology), to reflect technical updates to the Wassenaar Arrangement dual-use list and control lists administered by other multilateral export control regimes.

See the full consolidated list of controlled strategic military and dual-use items.

Office of Financial Sanctions Implementation updates

OFSI has published a new factsheet on the UK's financial sanctions in relation to maritime shipping.

OFSI has issued a new general licence permitting the payment of monies owed to designated persons pursuant to a court order to pay these to the Court Funds Office.

The deadline for providing additional attestations or items ancillary costs under the Russia Oil Price Cap has been increased from 28 to 30 days. See OFSI's industry guidance.

Ban on import of Russian diamonds processed in a third country

The prohibition on the import of Russian diamonds processed in a third country in relation to diamonds equal to or larger than one carat in weight came into effect on 1 March 2024.

The guidance on third-country processed Russian diamonds, which gives an explanation of the regulations, how to demonstrate compliance and sets out the relevant licencing provisions can be found here. A general licence has also been introduced, permitting the import of diamonds that were outside of Russia on 1 March 2024 and have remained outside of Russia since that date, as well as certain services and actions in relation to their import.

A further prohibition on the import of diamonds equal to or larger than 0.5 carats will come into effect from 1 September 2024.

Policy paper on the Sanctions and Anti-Money Laundering Act 2018

The FCDO published a post-legislative scrutiny memorandum on the Sanctions and Anti-Money Laundering Act 2018 (SAMLA).

It helpfully summarises the UK's sanctions legislation, court challenges, secondary legislation, statutory reports and statutory guidance linked to the sanctions regimes and the SAMLA's anti-money laundering provision.