UK GOVERNMENT PUBLISHES RESPONSE ON THE LEGAL FRAMEWORK FOR SANCTIONS POST-BREXIT

On 2 August 2017, the UK Government published its response to the public consultation on the UK’s future legal framework for imposing and implementing sanctions after the UK’s exit from the European Union (see our previous blog post).

The response sets out detailed answers to questions raised during the consultation, outlining the proposed powers for the imposition of financial and trade restrictions and the designation of individuals, as well as the proposed procedures under which such powers will be exercised. The Queen’s Speech on 21 June 2017 confirmed the Government’s intention to introduce a Sanctions Bill during the current Parliamentary session (2017-2019), with further guidance promised on certain issues in due course.

On 21 April 2017 the UK Government launched a 9-week public consultation on the proposed legal powers to enable the UK to impose and implement sanctions once the UK has left the European Union (see our previous blog post).

The White Paper was published on the UK Government website and was circulated widely to individuals and companies. Government officials held a number of roundtables to consult with key sectors including representatives from financial services, the legal profession, NGOs, industry professionals, and representative bodies. Officials also held informal discussions with international partners. The consultation closed on 23 June 2017, and the Government has now published its response.

The response reiterates the need for changes to the current legislative framework relating to sanctions. Many of the current sanctions regimes are implemented pursuant to powers under the European Communities Act 1972, which will be repealed upon Brexit. The UK will need to ensure that, as a permanent member of the UN Security Council, it continues to implement its UN obligations, and also that it has the power to introduce its own autonomous sanctions in pursuit of its wider foreign policy and national security objectives, in response to fast moving events.

The response contains a number of points of interest, including:

  • To introduce one standard threshold for designation of individuals, namely that there are “reasonable grounds to suspect”, together with a package of procedural protections to be contained in the Sanctions Bill (the “Bill”).
  • The response acknowledges that having a similar threshold as international partners will facilitate international coordination, which in turn is more likely to achieve UK policy aims and coherence across jurisdictions, minimizing the risk of circumvention.
  • In response to queries regarding the potential “extraterritoriality” of sanctions measures, the Government confirmed it had no plan to expand UK sanctions beyond their current reach, and that the Bill will set out how UK sanctions will apply where there is a link to the UK or “UK nexus”. The response also commits to providing “clear guidance” on this issue.
  • A power will be included in the Bill for the UK to continue to legislate directly for the Overseas Territories and Crown Dependencies where appropriate.
  • An annual review of each sanctions regime will be introduced to ensure that it remains appropriate, and every individual designation under each autonomous UK regime would be subject to review every three years.
  • The Bill will include protections to hold the Government to account for its use of sanctions designation powers, including the right of individuals and entities to challenge such designations. Designation decisions will be made in accordance with the Human Rights Act.
  • Licensing powers will be broadened to improve efficiency and flexibility and to enable general licences to be introduced in appropriate circumstances, for example for humanitarian aid. The response also acknowledges the need for clear and “high quality” guidance on the content and implementation of sanctions.
  • Reporting obligations should be broad to ensure compliance in all sectors. Further Regulations in this area have just been published and we will be issuing another blog post on this shortly.
  • A new power will be included in the Bill to seize and detain funds and assets that are subject to an asset freeze. These powers will go beyond those contained in the Proceeds of Crime Act 2002 (POCA) and the Criminal Finances Act 2017 (CFA).

COMMENT

The response provides some further detail on the approach that the Government will take post-Brexit to sanctions law and policy, although the full detail will only be revealed upon publication of the promised Sanctions Bill. Business will welcome the clarification and assurance that the Government will continue to coordinate with international partners on sanctions policy, although the response clearly anticipates the potential for the UK to act autonomously if appropriate. The proposal for broader licensing powers and the publication of related guidance will also be seen as a positive development.

For more information, please contact Andrew Cannon, Partner, or your usual Herbert Smith Freehills contact.

Leave a Comment

Filed under Europe, Sanctions and Money Laundering, UK

Leave a Reply