On 13 January 2022, the UK’s Foreign, Commonwealth & Development Office (the “FCDO”) announced the publication of the UK’s first post-Brexit annual sanctions report (the “Report”). The Report overlaps to a certain extent with the Office of Financial Sanctions Implementation’s (“OFSI’s”) recently published annual review (see our previous blogpost), although the two reviews cover different time periods. It provides some interesting insights into the UK’s sanctions strategy under the post-Brexit regime created by the Sanctions and Money Laundering Act 2018 (“SAMLA”).

The Report has been published in line with the FCDO’s statutory obligation under SAMLA to annually review whether each set of SAMLA-derived regulations imposing sanctions is still fit for purpose.

Some indication of the UK government’s view of its post-Brexit approach can be drawn from the comments of Lord (Tariq) Ahmad of Wimbledon, minister responsible for UK sanctions, who said upon publication of the Report: “since the end of the Transition Period, the UK has been pursuing an independent sanctions policy, driven by our foreign policy objectives and projecting the UK as a network of liberty and defender of human rights. By leaving the EU and moving to an independent sanctions policy, the UK has become more agile and has real autonomy to decide how we use sanctions and where it is in our interest to do so”.  He also emphasised in the foreword to the Report that “it is my firm belief that sanctions are most effective when we co-ordinate our sanctions with our key partners and in this respect we continue to work closely with the US, the EU and Canada”.

Some of the key points set out in the Report are as follows:

  • During 2021, the UK designated 160 individuals and entities across 13 regimes. The majority of those designations were under the Belarus sanctions regime.
  • Ten new “sanctions measures” (including capital markets and lending restrictions) were added to the UK’s Belarus sanctions regime.
  • The UK also launched its global anti-corruption sanctions regime, the second autonomous thematic regime to be included in the UK’s sanctions framework (the first being the global human rights sanctions regime).
  • The Report notes the availability of humanitarian exemptions and licensing grounds to minimise any humanitarian impact of sanctions. However, it states that OFSI received no humanitarian licence applications for the period 12 November 2020 to 26 November 2021.
  • All but one of the annual reviews carried out under SAMLA concluded that the relevant regulations remain appropriate for their purpose(s) and that the regime should be maintained. The exception was in respect of Burundi, where the FCDO concluded that the relevant regulations were no longer appropriate for one of the listed purposes (to encourage the government of Burundi to participate in negotiations with its political opponents in good faith to bring about a peaceful solution to the political situation in Burundi), on the basis that the political situation has evolved. This purpose was therefore removed from the relevant regulations, although the Burundi sanctions regime remains in force on the basis of concerns about respect for democracy, rule of law and governance; space for civil society actors; human rights; and longer-term stability in Burundi.

A year after Brexit, the divergence between the UK’s autonomous sanctions and the previous EU position has been comparatively limited. For commercial purposes, our experience has been that the most important differences have been differences of detail in how broadly similar sanctions in respect of Russia and Belarus have been implemented – rather than the introduction of the human rights and anti-corruption sanctions which the Report appears most keen to highlight.

The comments in the Report may signal that this state of affairs will continue, in light of the benefits of coordinated action in the sanctions space, but companies with multinational operations or exposure should continue to monitor developments in this area to ensure they understand any emerging differences between the measures imposed by each jurisdiction.

 

 

Susannah Cogman
Susannah Cogman
Partner
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Daniel Hudson
Daniel Hudson
Partner
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Elizabeth Head
Elizabeth Head
Of Counsel
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