Author: Syedur Rahman
9 March 2021
3 min read
Syedur Rahman of Rahman Ravelli assesses the post-Brexit sanctions challenges facing the UK – and how it has responded.
Now that the UK is no longer part of the European Union (EU), its government possesses its own powers to make sanctions.
Such wide-ranging powers give the UK the chance to draft its own policy and even become a major international force in shaping the approach taken to sanctions around the world. Yet two years ago, a report by the House of Commons Foreign Affairs Committee, “Fragmented and incoherent: the UK’s sanctions policy’’, highlighted what it termed a lack of clear government strategy; including muddled responses to the implications of Brexit.
There has, however, been progress since that point. The end of the transition period on 31 December 2020 was when the UK stopped implementing EU sanctions. The majority of those subject to restrictive measures by the EU were placed on the UK sanctions list, which provides details of those designated under regulations made under the Sanctions Act. Yet 113 designated individuals and organisations designated by the EU were not placed on the UK’s list. This can be seen as an indicator of the scope the UK now has for making its own decisions regarding its sanctions regime.
It remains to be seen whether the differences between the UK’s sanctions list and those designated by the EU will increase. If this happens, it may be due to differing political priorities between the EU and UK, the success (or otherwise) of those sanctioned challenging their designations in UK courts or even the UK’s wish to act swiftly in imposing sanctions as opposed to having to wait for collective agreement from all EU member states. As an example of the latter, the UK entered into joint sanctions with Canada against President of Belarus, Alexander Lukashenko, in September 2020; while the EU did not proceed with its own sanctions.
The EU and the UK have, however, both voiced a wish to work with each other on sanctions. This was embodied in Points 97 and 98 of October 2019’s joint Political Declaration, which states:
“While pursuing independent sanctions policies driven by their respective foreign policies, the Parties recognise sanctions as a multilateral foreign policy tool and the benefits of close consultation and cooperation.
“Consultation on sanctions should include the exchange of information on listings and their justification, development, implementation and enforcement, as well as technical support, and dialogue on future designations and regimes. Where foreign policy objectives that underpin a specific future sanction regime are aligned between the Parties, intensified exchange of information at appropriate stages of the policy cycle of this sanctions regime will take place, with the possibility of adopting sanctions that are mutually reinforcing.’’
Sanctions devised in the UK by the Foreign, Commonwealth and Development Office (FCDO) are implemented in the Treasury by the Office of Financial Sanctions Implementation (OFSI). OFSI produces guidance on the sanctions which is then issued to the private sector.
OFSI’s role in turning the thinking behind a particular sanction into a practical reality for the business world has seen it produce a steady flow of guidance for the private sector during the transition period. This has included “UK Financial Sanctions. General guidance for financial sanctions under the Sanctions and Anti-Money Laundering Act 2018’’ and “Monetary penalties for breaches of financial sanctions: guidance’’ – both issued in December 2020 - and publications relating specifically to Libya, Russia and the charity, import and export and maritime sectors.
The OFSI has signalled its aim of ensuring sanctions policy is integrated into the government’s wider economic crime agenda. Giles Thomson, the OFSI’s new director, spoke last month of the need to “build stronger links between sanctions and broader economic crime work’’
The UK has taken some notable steps regarding sanctions since the critical 2019 Foreign Affairs Committee report. At the time of writing, the UK’s first autonomous sanctions of 2021 have already gone live, with four security chiefs listed in the Zimbabwe sanctions regimes for serious human rights violations.
As yet, however, it remains to be seen exactly how the UK’s approach will develop, and what that will mean for many individuals and organisations – including the EU.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.