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The United Kingdom issues a raft of new Russia sanctions, relevant to the British Virgin Islands and the Cayman Islands (up to 1 March 2022)

01 Mar 2022

Following the invasion of Ukraine by Russia, the UK Government, alongside the member states of the European Union, the United States of America and other global stakeholders issued significant new sanctions and restrictive measures relevant to business in or with Russia.

The instruments themselves are framed as amendments to the UK’s pre-existing Russia sanctions regime, cast under the Russia (Sanctions) (EU Exit) Regulations 2019 (the 2019 UK-Russia Regulations). Additions and amendments to the asset freeze list occur through the issuance of Financial Notices by the Her Majesty’s Treasury, Office of Financial Sanctions Implementation.

Note: The position in relation to the new Russian sanctions is constantly evolving and we will continue to update the instruments published on this blog. Please find an updated table of sanctions here.

Summary of new measures

As outlined in the UK Government Announcement, the UK sanctions package is now among the most aggressive globally and comprises the following (in summary, based on a UK Government Announcement from 24 February 2022):

  • All major Russian banks will have their assets frozen and will be excluded from the UK financial system. This will stop them from accessing sterling and clearing payments through the UK. This included imposing a full and immediate asset freeze on VTB Bank.
  • Legislation will be imposed early next week to stop major Russian companies and the State from raising finance or borrowing money on UK markets.
  • 100 new individuals or entities will be added to the UK’s Sanctions List.
  • Aeroflot, Russia’s national airline, will be banned from landing in the UK.
  • All dual use export licences to cover components which can be used for military purposes have been suspended with immediate effect.
  • The UK will stop exports of high-tech items and oil refinery equipment in the next few days.
  • There will be a limit of £50,000 on deposits Russians can make into a UK bank account.
  • Removing Russia out of the SWIFT international payment system, which has been supported by the European Union and the US.

On 28 February 2022, further UK sanctions were released:

  • The additional measures introduce a prohibition on UK persons undertaking financial transactions involving the Central Bank of Russia, the Russian National Wealth Fund and the Ministry of Finance of the Russian Federation and the UK Government announced that it will immediately take all necessary steps to bring into effect restrictions.
  • Other points to note include:
    • Restrictions on Russian financial institutions – VTB Bank was designated by the UK last week, along with five other Russian banks and it is not yet known what additional financial institutions may be subjected to restrictions.
    • Restrictions to prevent Russian companies from issuing transferable securities and money market instruments in the UK, in addition to the restrictions on the Russian state raising sovereign debt.
    • Powers to prevent designated banks from accessing Sterling and clearing payments through the UK.
  • President Vladimir Putin and Foreign Minister Sergei Lavrov were among dozens of new listings of Russian persons and companies subject to UK asset freezes.
  • Additional trade restrictions, including a prohibition on the export of certain high-end critical technical equipment and components in sectors including electronics, telecommunications and aerospace. The announcement reiterated that trade restrictions applicable to Crimea are extended to apply to Donetsk and Luhansk.

Consolidated table of UK sanctions measures on Russia

Click here to view the table.

The position in the British Overseas Territories (BOTs)

Following the introduction of the post-Brexit UK Sanctions and Anti Money Laundering Act 2018, the UK more closely oversees the implementation of sanctions measures in the BOTs including Anguilla, the British Virgin Islands, and the Cayman Islands. Bermuda implements its own sanctions legislation which largely follows the UK legislation.

In this regard the 2019 UK-Russia Regulations, as amended over time, were directly extended to designated BOTs, including Anguilla, BVI, and the Cayman Islands under the Russia (Sanctions) (Overseas Territories) Order 2020.

As such changes to the 2019 UK-Russia Regulations under the 2022 UK-Russia Amendments are “directly effective” in the BOTs as well.

The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 can be found here.

The Russia (Sanctions) (Overseas Territories) Order 2020 can be found here.