One of the key changes has been the introduction of the new concept of “persons connected with” a sanctioned country. EU sanctions regulations typically apply where sanctioned goods or services are to be provided to persons in a sanctioned jurisdiction or for use there. However, the use of the phrase “persons connected with” opens up the scope of relevant restrictions applying to the provision of specified goods/services to persons located outside of the sanctioned country. This has created compliance challenges and a good case in point is the regulations made under SAMLA in relation to Russia. These contain restrictions on the export of certain energy goods and related financial services. The new SAMLA measures opened up the possibility that they would apply to energy projects outside of Russia, but which have Russian interests.

Happily, however, SAMLA also contains broad-ranging powers enabling the UK Government to issue general licenses in a manner that was not previously possible under UK sanctions legislation. Hogan Lovells successfully advised Lloyd’s of London on the first such license under UK SAMLA sanctions concerning Russia. This involved liaising with three Government departments under considerable time pressure. The license permits the provision of all types of financial services to persons connected with Russia in connection with activities involving energy projects outside of that country and is potentially worth US$600 million per year to the London insurance market alone.

At a policy level, the agility with which the UK is now able to implement new sanctions regimes and restrictions is beneficial in advancing its foreign policy goals. The UK’s desire to capitalize on this has been evident, for example, in its recent Global Human Rights Sanctions and in relation to recent Burmese and Global Anti-Corruption Sanctions (a novel development which echoes U.S. provisions). But, with such agility comes compliance complexity for business.

Looking back, to look forward

To some degree, to look forward it is necessary to also look backwards. Under the joint Political Declaration, the framework for the future relationship between the EU and the UK is set out. Within this, the parties recognized “sanctions as a multilateral foreign policy tool and the benefits of close consultation and cooperation.” It stands to reason that sanctions are more likely to be effective when introduced in a coordinated and multi-lateral fashion. So, the EU and UK will likely cooperate where foreign policy objectives align. But there will be divergences in sanctions measures as a result of timing differences in implementation. There is also scope for substantive divergence in the longer term and we have already seen this through the drafting changes to the SAML sanctions regimes as well as the UK’s decision not to bring across every EU asset freeze listing. It is therefore important that businesses treat the two sanctions frameworks as separate and not assume that the position is the same under each going forwards.

Authored by Jamie Rogers and Ellie Rees.