Sanctions and Export Control | UK Regulatory Outlook January 2025

Sanctions Regulations come into force

As previously reported, the Sanctions (EU Exit) (Miscellaneous Amendments) (No.2) Regulations 2024 were laid before Parliament on 14 November 2024. The regulation, which makes a number of changes to the UK sanctions regimes, came into force on 5 December 2024.

A reminder that the extension of reporting obligations to high value dealers, art market participants, letting agents and insolvency practitioners will come into force on 14 May 2025. This is to allow the Office for Financial Sanctions Implementation (OFSI) to complete further industry engagement.

It is anticipated that the OFSI will continue to cooperate with its international partners in countries such as the US, in combatting Russia's circumvention of sanctions. It is expected that OFSI will collaborate with other regulators including the new Office for Trade Sanctions Implementation (OTSI), in enforcing sanctions and export controls. Firms should make sure they are aware of the changes to reporting obligations to ensure they remain compliant.

To find out more, register to attend our "Future of Financial Services Week" webinar, where Osborne Clarke's experts will discuss recent developments in financial crime and provide a roadmap for compliance.

Russian sanctions circumvention guidance for exporters

The OTSI has published new guidance aimed at supporting exporters and manufacturers in the UK to identify Russian sanctions evasion practices and help businesses to develop strategies to reduce the risk of their goods being diverted to Russia.

The document highlights that it remains the responsibility of UK businesses to determine the extent of their sanctions risk exposure and to develop safeguards and controls. The guidance contains information on:

• the goods most at risk of being illegally diverted to Russia (the Common High Priority List);
• third countries that businesses should consider conducting enhanced due diligence for when exporting at-risk products;
• red flag indicators of potential export control and sanctions evasion;
• compliance best practice and enhanced due diligence procedures;
• the enforcement powers of the OTSI and HMRC in the event of a trade sanctions breach; and
• additional resources to help businesses in managing their risk and meeting compliance obligations.

OTSI and the Department for Business and Trade published supplementary guidance for businesses involved in the export and making available of common high priority items and other items critical to Russian weapons systems and military development.

The document clarifies that while contractual clauses prohibiting buyers and importers from re-exporting items subject to Russia sanctions to Russia, the inclusion of "no-Russia" clauses in export contracts may represent a component of due diligence best practice and reduce the risk of involvement in a potential sanctions breach through the businesses' customers.

OFSI general licences

The following general licences were revoked on 5 December 2024:

• General Licence INT/2024/4836676, for payments to the FCA from or on behalf of a designated person.
• General Licence INT/2023/3626884, for designated persons to make payments to Companies House
• General Licence INT/2023/3781228, for payments to local authorities.
• General Licence INT/2024/4881897, for payments to be made to the revenue authorities by or on behalf of a designated person.

The above payments are now covered by the required payments exception introduced under the Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024.