UK strengthens Russian sanctions legislation by extending its sanctions designation criteria

As anticipated, on 10 February 2022, the UK Government signed The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 (SI 2022/123) (the “Amended Regulations”), which significantly broadens the scope of the UK’s sanctions regime against Russia.

The UK has not publicly disclosed the possible targets of any sanctions, but warned they would be imposed the moment any invasion of Ukraine takes place. The Government has announced that it can now “impose sanctions on Russian businesses and individuals in a wide range of economic and strategically significant sectors, such as the chemical, defence, extractives, ICT and financial services industries”¹.The aim of the Amended Regulations is to target individuals and/or entities that provide significant support to the Kremlin. However, at time of writing, there are no new designations under the Amended Regulations.

Under Section 6(1)(a) of the Amended Regulations, the Secretary of State may designate a person if the Secretary of State has reasonable grounds to suspect that a person is an “involved person”.  Under the Amended Regulations, an “involved person” is defined as a person who:

• is or has been involved in - 
  • destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine, or
  • obtaining a benefit from or supporting the Government of Russia,
• is owned or controlled directly or indirectly by a person who is or has been so involved,
• is acting on behalf of or at the direction of a person who is or has been so involved, or
• is a member of, or associated with, a person who is or has been so involved.

In addition, the designation criterion under the Amended Regulations now captures individuals or entities obtaining a benefit from or supporting the Government of Russia. Pursuant to Regulation 6(4) of the Amended Regulations, obtaining a benefit from or supporting the Government of Russia means:

• carrying on business as a Government of Russia-affiliated entity;
•  carrying on business of economic significance to the Government of Russia;
• carrying on business in a sector of strategic significance to the Government of Russia;
• owning or controlling directly or indirectly, or working as a director (whether executive or non-executive), trustee, or equivalent, of—
• a Government of Russia-affiliated entity;
• a person, other than an individual, which falls within sub-paragraph (b) or (c).

Essentially, the UK can now sanction not just those linked directly to the destabilisation of Ukraine, but also Government of Russia affiliated entities and businesses of economic and strategic significance to the Russian government, as well as their owners, directors and trustees.

The UK Government explained that the broadening of the UK’s sanctions powers will not designate or impose sanctions on any individuals or businesses automatically, but will provide the additional powers the UK needs to be able to do so in the event of any further Russian incursion into Ukraine.

Next steps

While it is unclear when and to what extent the UK Government will utilise its expanded powers against Russia, the UK Government have ensured that they have the capability to target a wide range of targets instrumental to the Kremlin. In the meantime, entities that are subject to UK sanctions jurisdiction and have exposure to Russia, specifically those entities operating within the sectors seen as strategically significant to Russia, should begin to familiarise themselves with the potential repercussions of the Amended Regulations.

For a link to the newly signed legislation please see here.

For guidance on UK sanctions against Russia, please see here.

If you would like more information on how potential Russia-related UK, EU and US sanctions could impact your business going forward, please contact a member of our Sanctions team or access our The Sanctions Navigator tool, which helps you stay on top of ever-changing international sanctions regimes, and provides you with a practical overview of all applicable sanctions regimes (EU, France, UK, UN, and U.S.A.). For more information click here or find out more about our International trade team.