Understanding Financial Sanctions Against Russia - What You Need to Know
The UK government has imposed financial sanctions on Russia in response to the country’s actions in Ukraine and other parts of the world. These sanctions are designed to restrict the ability of Russian individuals and entities to access and use the UK financial system. This article will briefly explain what these sanctions are, how they work and what UK businesses need to know in order to comply with them.
What are Financial Sanctions Against Russia?
Financial sanctions against Russia are a form of restrictive measure imposed by the UK government. They are designed to prevent Russian individuals and entities being able to use the UK financial system, which they would wish to do if they were not sanctioned.
The UK government has imposed a range of financial sanctions on Russia. These include asset freezes, restrictions on the provision of financial services and prohibitions on the purchase of certain types of Russian debt. The sanctions are targeted at specific individuals and entities and have been devised and introduced due to Russian aggression in Ukraine and other states.
How do Financial Sanctions Against Russia Work?
Financial sanctions are enforced by the UK government through the use of regulations and orders. These regulations and orders set out the specific individuals and entities that are subject to the sanctions, and the activities that are prohibited.
The UK government has established a list of designated persons and entities that are subject to the sanctions. This list is regularly updated and can be found on the UK government’s website.
What do UK Businesses Need to Know?
UK businesses need to be aware of the financial sanctions against Russia and ensure that they comply with them. Businesses should be aware of the list of designated persons and entities and make sure that they do not provide any services to those individuals or entities.
Businesses should never engage in any activity that is prohibited by the sanctions. Such activity can include providing financial services to designated persons and entities, purchasing certain types of Russian debt, and engaging in certain types of trade with Russia. Businesses should also be aware that the UK government can impose additional sanctions at any time. For this reason, those in business need to regularly check the UK government’s website for any sanctions updates, so they are fully aware of all activities that are prohibited by sanctions.
OFSI (the Office of Financial Sanctions Implementation) is the authority responsible for implementing the UK’s financial sanctions on behalf of HM Treasury. It can impose fines on individuals or entities for breaching sanctions but it cannot bring prosecutions. OFSI works closely with the National Crime Agency, which will refer cases for prosecution to the Crown Prosecution Service (CPS).
OFSI may also refer a case to the Serious Fraud Office (SFO) for investigation and prosecution. HM Revenue and Customs (HMRC) can also bring a criminal prosecution, and the Financial Conduct Authority (FCA) can bring enforcement action against regulated companies that fail to maintain systems to address the risk of sanctions violation.
In cases involving a prosecution, financial sanctions offences are punishable upon conviction by up to seven years’ imprisonment and/or an unlimited fine
Faced with such potential penalties, companies are advised to adopt certain practices to ensure their activities do not run the risk of breaching sanctions. They need to assess the risk of sanctions breaches involving their products, the sectors of business and geographical areas they are active in, their trading partners and third parties.
Carefully-devised preventative measures will ensure that any identified risks are reduced or even removed. Developing a workplace culture that emphasises the reporting of any suspicions of wrongdoing – accompanied by a procedure for the making and investigation of such reports – will also help remove sanctions breaching risks.
A one-size-fits-all approach is not appropriate, so companies need to take advice on what they should do to ensure they do not breach sanctions. Advice can also be important to a company when it comes to knowing how to respond if it comes under investigation for sanctions breaches.
Matters such as how to deal with the investigating authorities, who needs to be notified, how to conduct an internal investigation and how to put right any problems all need to be considered.
Conclusion
Financial sanctions against Russia are an important tool for the UK government. It is important for UK businesses to know about these sanctions and ensure that they comply with them.
To do this, they have to be aware of the list of designated persons and entities and make sure that they do not provide any services to those individuals or entities. They should also do everything possible to prevent themselves engaging in any other activity prohibited by the sanctions.
