New UK Regulations on the Russia Sanctions Regime

On 10 February 2022, the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 (Regulations)¹ entered into force. The Regulations amend the designation criteria of the Russia (Sanctions) (EU Exit) Regulations 2019.²

As outlined below, the designation criteria now includes those who have been involved in obtaining a benefit from or supporting the Government of Russia.³ There are no new designations at this time.

Context

The UK sanctions regime is aimed at encouraging Russia to cease actions which are perceived by the UK Government to be aimed at destabilising Ukraine, including allegations of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.

The Regulations allow the UK Government to impose asset freezes on those alleged to be involved in either:

1. "destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine"

This includes persons considered responsible for engaging in, providing support for (including providing financial services, or making available funds, economic resources, goods or technology), or promoting any policy or action that could be perceived in the above manner.

2. "obtaining a benefit from or supporting the Government of Russia"

This includes (a) carrying on business as a Government of Russia-affiliated entity;⁴ (b) carrying on business of economic significance to the Government of Russia; (c) carrying on business in a sector of strategic significance to the Government of Russia;⁵ or (d) owning or controlling directly or indirectly, or working as a director (whether executive or non-executive), trustee, or equivalent, of: (i) a Government of Russia-affiliated entity; or (ii) a person, other than an individual, which falls within sub-paragraph (b) or (c).

Impact and next steps

The Regulations increase the UK sanctions risks for Russian business or entities having "economic significance" to the Government of Russia or operating in nine sectors of strategic significance to the Government of Russia specified in the Regulations.

We advise you to consult your legal counsel to understand how this news may affect you and/or your business.

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¹ See The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022

² See The Russia (Sanctions) (EU Exit) Regulations 2019

³ In the Regulations "Government of Russia" means: (a) the Presidency of the Russian Federation; (b) public bodies and agencies subordinate to the President of the Russian Federation, including the Administration of the President of the Russian Federation; (c) the Chairman of the Government of the Russian Federation and the deputies of the Chairman of the Government; (d) any Ministry of the Russian Federation; (e) any other public body or agency of the Government of the Russian Federation, including the armed forces and law-enforcement agencies of the Russian Federation; (f) the Central Bank of the Russian Federation;

⁴ In the Regulations "Government of Russia-affiliated entity" means a person, other than an individual: (a) which is owned or controlled directly or indirectly by the Government of Russia; (b) in which the Government of Russia holds directly or indirectly a minority interest, (c) which receives, or has received, financing, directly or indirectly, from the Russian Direct Investment Fund or the National Wealth Fund, or (d) which otherwise obtains a financial benefit or other material benefit from the Government of Russia.

⁵ In the Regulations "Sector of strategic significance to the Government of Russia" means: (a) the Russian chemicals sector; (b) the Russian construction sector; (c) the Russian defence sector; (d) the Russian electronics sector; (e) the Russian energy sector; (f) the Russian extractives sector; (g) the Russian financial services sector; (h) the Russian information, communications and digital technologies sector; (i) the Russian transport sector.