UK Bolsters Sanctions Powers Against Russia

The United Kingdom on 10 February 2022 amended its Russian sanctions law to more easily add persons to its targeted sanctions regime, which enhances the UK’s ability to quickly impose sanctions against most parts of the Russian economy (and their operations worldwide).

The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 enable the UK government to impose sanctions on persons who meet new designation criteria. Those sanctions can be imposed at any time if the UK government believes they serve the purpose of encouraging Russia to cease destabilising or undermining Ukraine.

Designation Criteria

Under the new law, the UK government may only impose sanctions against a person who is involved in either

• destabilising or undermining Ukraine (or persons connected to them); or
• obtaining a benefit from or supporting the Government of Russia (or persons connected to them).

A “person involved in obtaining a benefit from or supporting the Government of Russia” includes persons

• 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 the Russian (1) chemicals sector; (2) construction sector; (3) defence sector; (4) electronics sector; (5) energy sector; (6) extractives sector; (7) financial services sector; (8) information, communications, and digital technologies sector; or (9) transport sector; or
• owning or controlling directly or indirectly, or working as a director or trustee of, the above entities.

No New UK Sanctions at This Time

The amendments appear to be timed politically to coincide with meetings on 10 February 2022 between the UK and Russian foreign ministers in Moscow. If the UK decides to impose new sanctions against Russia—presumably only after a Russian invasion of Ukraine—there will need to be new UK laws to implement those sanctions, which could fall into the below categories:

• Exceptions to the sanctions to reduce the harm to the UK economy and its public (i.e., so that deposits at Russian banks can be withdrawn, Russian-owned football clubs can keep playing, jobs are not lost in UK businesses, and other considerations).
• Implementation of the exceptions being negotiated with the United States and the European Union, so there is less harm to the US and EU economies.
• An unwinding or transition period (similar to that used by the United States).
• Various targeted sanctions (e.g., export controls, prohibitions on certain activities).

CONTACTS

If you have any questions or would like more information on the issues discussed in this LawFlash, the Ukraine conflict, or on actual and potential Russia sanctions imposed by the US, EU, or UK generally, please contact any of the following Morgan Lewis lawyers: 

Ukraine Task Force
Giovanna M. Cinelli
Joanna Christoforou
Bruce Johnston
Jennifer A. Josefson
Grigory Marinichev
Michael Masling
Kenneth J. Nunnenkamp
Christina Renner
Vasilisa Strizh
Carl A. Valenstein
Robert Bolgar-Smith
Alexey Chertov
Abby Clifford
Jiazhen (Ivon) Guo
Katelyn M. Hilferty
Christian Kozlowski
Eli Rymland-Kelly