Sanctions and export control | UK Regulatory Outlook September 2024

Office of Trade Sanctions Implementation

In 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 (see our previous Regulatory Outlook). The new UK government has now laid the foundational regulations to establish the OTSI statutory powers before Parliament – nine months after the new body was first announced.

OTSI, which is part of the Department for Business and Trade, will be responsible for the civil enforcement of certain trade sanctions relating to UK services and trade of sanctioned goods outside the UK. The Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 introduce new enforcement powers, including the power to impose monetary penalties of up to £1 million or 50% of the estimated value of the breach (whichever is higher) for breaches of aircraft, shipping and certain trade sanctions.

Other enforcement tools include publishing reports where a breach of sanctions regulations has occurred, reporting obligations for relevant persons and trade sanctions information requests. Failure to comply with the new obligations can give rise to criminal liability.

All UK companies and overseas branches of UK companies should take note of the new regulations, which will enter into force on 10 October 2024. See the press release. For further guidance, see our Insight.

Annual frozen asset reporting exercise

As part of its annual review, HM Treasury requests that all persons holding or controlling funds or economic resources belonging to, owned, held or controlled by a designated person/entity to report details of those frozen assets.

Anyone possessing this information or have previously reported frozen assets must complete the form and submit it to OFSI by 11 November 2024.

UK amends Russia Regulations on legal advisory services

On 6 September 2024, the Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2024 came into force, amending the Russia (Sanctions) (EU Exit) Regulations 2019, clarifying that the provision of legal advice in relation to compliance with non-UK sanctions and criminal legislation is permitted.

The amendment also makes a number of other changes, including to the definition of legal advisory services, the exceptions to the prohibition and the knowledge a person must have before the prohibition on the provision of certain legal advisory services applies.

This instrument replaces the general trade licence for legal advisory services published in August 2023 (see our previous Regulatory Outlook), which has been revoked.

The government's Russia sanctions guidance and guidance on services sanctions has been updated accordingly. For further details and assistance on these changes please get in touch with our experienced sanctions team below.

UK expands designation criteria under Russia sanctions

The UK government published the Russia (Sanctions) (EU Exit) (Amendment) (No.3) Regulations 2024, which amends the Russia (Sanctions) (EU Exit) Regulations 2019 by expanding the activities for which a person may be designated.

Persons can now be designated for being "involved in destabilising Ukraine or threatening the territorial integrity, sovereignty or independence" if they own, control, or are working as a director, trustee or other manager or hold the right to nominate a director, trustee, or other manager or equivalent of, a person, other than an individual, who falls within sub-paragraphs (a) to (g) of Regulation 6(3).

Persons can now be designated for being "involved in obtaining a benefit from or supporting the Government of Russia" if they provide financial services, make available funds, economic resources, goods or technology, to a person who falls within sub-paragraphs (a) to (e) of Regulation 6(3).

For further information see the explanatory memorandum.

New open general licence

The Department for Business & Trade published an AUKUS specific open general licence (OGL) permitting the export of dual-use items, military goods software, or technology and trade of military goods between and among the UK, Australia, and the US.

The OGL follows a "historic breakthrough" in defence trade between the UK, Australia, and the US, whereby the three nations announced export control changes which will lift certain export controls and restrictions on technology sharing.

To use the OGL, exporters and recipients of the goods must be on the AUKUS nations' authorised users list. Find out more about how to become an authorised user and to use the OGL in the accompanying guidance note.

The OGL entered into force on 1 September 2024 and is of indefinite duration.

OFSI general licences

The Office of Financial Sanctions Implementation (OFSI) published the following general licences:

• INT/2024/5028385: This general licence allows payments and other permitted activities to take place in relation to the insolvency proceedings associated with East-West United Bank. The licence came into effect from 9 August 2024 and expires on 8 August 2029.
• INT/2023/3781228: This general licence has been updated to allow for the payment of fees to local authorities for business improvement district levies by designated persons.
• INT/2024/4919848: This general licence allows for the sale, divestment or transfer of financial instruments held at the National Settlement Depository and the payment of safe keeping fees. The licence came into effect from 3 July 2024 and has been extended to 12 October 2024.

New export general licence

The Department for Business and Trade's Export Control Joint Unit (ECJU) published the open general licence (global combat air programme). The licence permits the export and transfers from the UK of dual-use items, military goods software, or technology, and the trade of military goods for use of the Global Combat Air Programme (GCAP).

The licence came into effect on 14 August 2024 and is of indefinite duration. For further details see the guidance note.

The ECJU provides training for exporting and trading individuals and companies with the aim of increasing understanding of the UK's strategic export controls. Register for available courses, webinars, seminars and workshops.

New UK Sanctions List search function

The Foreign, Commonwealth and Development Office launched a new search function to the UK Sanctions List. Users are now able to search for designated persons, entities and ships under the Sanctions and Anti-Money Laundering Act 2018 without having to download the list in its entirety.