Brexit: What it means for UK sanctions

As of 23.00 GMT on 31st December 2020, the UK no longer implements EU sanctions, but instead UK sanctions. The UK Sanctions and Anti-Money Laundering Act 2018 is now the legislation used to impose, lift, amend, and update sanctions and anti-money laundering (AML) regimes in the UK: these include financial sanctions, immigration sanctions, trade sanctions, aircraft sanctions, shipping sanctions, and money laundering regulations.

Additionally, the UK imposes financial sanctions through the Counter Terrorism Act 2008 and the Anti-Terrorism, Crime and Security Act 2001.

Complying with UK sanctions

OFSI maintains two lists of individuals and entities subject to financial sanctions:

1. The ‘consolidated list’
   This is a list of all asset freeze targets listed under UK autonomous financial sanctions legislation and UN sanctions. For companies that need to comply with UK sanctions regulations, it is imperative to note that there are already differences between entities listed in the EU sanctions regulations and entities listed in the UK sanctions regulations. 113 entities on EU sanctions regulations have not been designated in the UK so are no longer subject to an asset freeze / travel ban in the UK. The fact that the EU and UK sanctions lists have diverged is important. At any point the UK could impose sanctions on entities that are not sanctioned on EU lists, meaning UK companies should be vigilant and have responsive sanctions solutions to comply with such changes.
2. List of entities subject to capital markets restrictions
   OFSI maintains a separate list of entities subject to specific capital market restrictions. These entities are not contained on the consolidated list, and can be found here. The entities concerned are solely Russian.

It is worth noting that, as per Section 2.2.3. of the OFSI UK Financial Sanctions General Guidance for financial sanctions under the Sanctions and Anti-Money Laundering Act 2018, the Home Office list of proscribed terrorist groups is not included in the consolidated list. UK entities that need to comply with UK sanctions need to ensure parties they interact with are appropriately screened against the aforementioned lists.

Further, new application forms must now be used for obtaining UK licences in relation to sanctions.

Applicability

UK financial sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons, wherever they are in the world. This means that:

• All individuals and legal entities within the UK’s territory must comply with UK financial sanctions;
• All UK nationals and legal entities established under UK law, including their branches, must comply with UK financial sanctions, irrespective of where their activities take place.

The ‘Blocking’ Regulations

On 19th November 2020 the UK published guidance called ‘Protection of Trading Interests (retained blocking regulation)’. The EU’s ‘Blocking’ Regulation 2271/96 prohibits compliance with certain US sanctions relating to Iran and Cuba. US sanctions have extraterritorial reach meaning they can affect non-US persons, and the blocking regulation makes it illegal for protected persons to comply with the regulation. The UK guidance explains that the UK has retained this regulation and explains that the Secretary of State for International Trade, instead of the European Commission, will now administer requests for compliance with U.S. sanctions. This means at the point in writing there are no changes made to blocking regulations by Brexit from a compliance standpoint, other than the fact that requests made on the matter are now submitted to the UK Secretary of State for International Trade.

Support with UK Sanctions Compliance

For support with compliance with national and international sanctions, please contact our Regulatory Risk team members:

• Stacey Winters is a Partner in Deloitte’s Risk Advisory Practice
• Julia Bell is a Director in Deloitte’s Risk Advisory Practice