On 29 April 2023, the Office of Financial Sanctions Implementation (OFSI) issued a new General Licence INT/2023/2954852 (the NewGL) for legal services under the Russia and Belarus sanction regimes to replace the General Licence INT/2022/2252300 (the Old GL).

The Old GL expired on 28 April 2023 and is now invalid. Those who reported using this licence must submit their reports to OFSI by 5 May 2023.

Following stakeholders’ feedback and a high volume of applications related to legal fee payments, OFSI has decided to issue the New GL with a term of six months, which came into effect on 29 April 2023 and will expire on 28 October 2023.

As with the Old GL, the New GL, exempts legal firms and counsel from requiring a specific licence from OFSI to receive payment from designated persons (DPs) under the Russia or Belarus sanctions regimes, provided the users meet the terms of the New GL. The same applies to providers of expenses for DPs under these regimes.

It is important to note that the New GL is not an extension or duplication of the Old GL and its terms should be reviewed carefully before use. Below are the key changes made to the New GL.

Caps on legal fees and expenses

• The New GL resets the caps on professional legal fees and expenses, which means that legal fees and expenses paid under the Old GL are not counted towards the caps under the New GL. Specifically, users can use the legal fees cap of £500,000 (including VAT) and expenses cap of 5 per cent of legal fees (up to £25,000) under Parts A and B of the New GL.
• Where users have exceeded the relevant caps on legal fees and/or expenses, they will need to apply for a specific licence for the balance of the legal fees and/or expenses.
• The two legal fees caps under Parts A and B can be combined, subject to license terms. This means that if the provision of legal services has started before designation of the DP and continues post-designation, up to £1 million (including VAT) could be used. The legal expenses caps under Parts A and B could similarly be combined, again subject to the terms of the New GL.

Definition of “Legal Services”

The definition of Legal Services has been modified to align with the policy position outlined in HM Treasury's written ministerial statement of 30 March 2023, available here. Professional legal fees and expenses linked to defamation or malicious falsehood cases cannot be paid using the New GL. Specific licence applications for such cases will be assessed on a case-by-case basis to determine their suitability and compliance with the right to a fair hearing. However, OFSI's initial stance is that payment of legal fees in these cases would not be fitting.

Reporting obligations

• Users of the New GL are required to submit a report to OFSI within seven days of either the completion of legal services or the termination of the licence (ie 28 October 2023), whichever comes first.
• Users must retain records of the activities purportedly permitted under the New GL for at least six years.

General Licence INT/2023/2954852 can be found here.

OFSI has published a blog detailing the amendments to the General Licence and can be found here.

Our previous blog post on the UK’s Legal Services General Licence can be found here.

General licences issued in the UK Overseas Territories (BVI, Cayman and Bermuda) can be found here.