As of 5pm on 10 February 2022, the UK introduced secondary legislation which expanded the 2019 sanctions regime in an attempt to deter Russia from escalating tensions with Ukraine. The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 provide for the toughest sanctions regime the UK has ever had against Russia.
As a result, any further aggression by Russia towards Ukraine could have a serious impact on a broad range of people, businesses and other entities affiliated with the Russian government, including their owners, directors and trustees. David Savage, Oliver Ingham and Thulasy Packianathan explain the significance of the new sanctions package.
Prior to the new rules, only those directly linked to the destabilisation of Ukraine could be designated. However, the amendments to the sanctions regime now allow the UK to also designate individuals and entities that could obtain “a benefit from or supporting the Government of Russia”.
Who is affected?
- businesses of economic significance to the Russian government
- businesses within a sector of strategic significance to the Russian government
- entities or persons affiliated with the Russian government, including those owning, controlling or working as a director or trustee of an affiliated entity.
Affiliated entities of the Government of Russia include businesses which:
- are owned or controlled directly or indirectly by the Russian government;
- the Russian government holds a minority interest in (whether directly or indirectly);
- receives funding directly or indirectly from the Russian Direct Investment Fund or the National Wealth Fund, or otherwise receives a financial or material benefit from the Russian government
Which sectors might be affected?
Under the latest amendments, the UK can sanction Russian businesses and individuals in a broader range of economic and strategically significant sectors. These include:
- financial services
- information, communications and digital technologies; and
While these are not automatic sanctions, and no entities or individuals have been newly designated as targets, the new legislation provides the UK government with the ability to act quickly in the event of any further Russian incursion into Ukraine.
Those who may fall within the criteria above should take steps now to prepare for the introduction of further sanctions under the new regime. For more information, see our earlier article setting out possible considerations for businesses.
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