On February 10, 2022, the United Kingdom published new legislation (the “Amendment”) significantly expanding the scope of targets on which the UK government may impose sanctions relating to Russia.[1]  The Amendment, which was issued in response to the current situation in Ukraine and takes immediate effect, broadens the designation criteria of the existing Russia (Sanctions) (EU Exit) Regulations 2019.[2]  Whereas the existing provisions were limited to persons directly engaged in activities relating to the “destabilisation” of Ukraine,[3] the Amendment further authorizes sanctions against:

  • any “Government of Russia-affiliated entity,” defined as entities:
    • directly or indirectly owned or controlled by the Russian government;
    • in which the Russian government directly or indirectly holds a minority interest;
    • that receive or have received financing directly or indirectly from the Russian Direct Investment Fund or the National Wealth Fund; or
    • which “otherwise obtain a financial benefit or other material benefit” from the Russian government;
  • individuals or entities carrying on business of “economic significance” (which is not further defined) to the Russian government;
  • individuals or entities carrying on business in a sector of “strategic significance” to the Russian government, defined as the Russian chemicals, construction, defence, electronics, energy, extractives, financial services, information, communications and digital technology, and transport sectors; and
  • individuals or entities that directly or indirectly own or control or work as a director (whether executive or non-executive), trustee, or equivalent of any entity in the above categories.

As before, sanctions imposed under the United Kingdom’s Russia sanctions program include an asset freeze, travel ban (for individuals), prohibition on making funds or economic resources available to or for the benefit of the designated party, and prohibition on dealing with funds or economic resources of the designated party (as well as entities owned or controlled by the designated party).

The Amendment marks the first new sanctions legal authority among the United States, European Union, and United Kingdom relating to the current situation in Ukraine and sets the stage for coordinated U.S./UK response in the event of an escalation of hostilities in Ukraine by more closely aligning the scope of potential sanctions targets.  As described in our earlier blog post, on April 15, 2021 President Biden issued Executive Order (E.O.) 14024 similarly expanding U.S. authorization to impose blocking sanctions against, among other criteria, “any subdivision, agency, or instrumentality” of the Russian government and parties operating in the Russian technology, defence, and defence-related sectors, or “any other sector” of the Russian economy (as may be identified at a later date).[4]  Earlier U.S. legal provisions separately authorized the imposition of sanctions against parties operating in the Russian financial services, energy, metals and mining, and engineering sectors, as well as state-owned entities operating in the Russian railway sector.[5]

[1] The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022, https://www.legislation.gov.uk/uksi/2022/123/regulation/3/made.

[2] The Russia (Sanctions) (EU Exit) Regulations 2019. https://www.legislation.gov.uk/uksi/2019/855/made/data.xht?view=snippet&wrap=true.

[3] Foreign, Commonwealth & Development Office, “Strengthened UK Russian sanctions legislation comes into force” (Feb. 10, 2022), https://www.gov.uk/government/news/strengthened-uk-russian-sanctions-legislation-comes-into-force.

[4] Cleary Foreign Investment and International Trade Watch, “Biden Administration Imposes New Restrictions on Russian Sovereign Debt, Authorizes Additional Sanctions” (April 16, 2021), https://www.clearytradewatch.com/2021/04/biden-administration-imposes-new-restrictions-on-russian-sovereign-debt-authorizes-additional-sanctions/#more-2539; E.O. 14024, “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation,” 86 Fed. Reg. 20249 (April 15, 2021), https://www.federalregister.gov/documents/2021/04/19/2021-08098/blocking-property-with-respect-to-specified-harmful-foreign-activities-of-the-government-of-the.

[5] E.O. 13662, “Blocking Property of Additional Persons Contributing to the

Situation in Ukraine,” 79 Fed. Reg. 16169 (Mar. 20, 2014), https://home.treasury.gov/system/files/126/ukraine_eo3.pdf; Countering American Adversaries through Sanctions Act (CAATSA), Pub. L. No. 115‑44, Sec. 223.