Kartik Mittal and Stephanie Limaco discuss the recent developments in the UK’s Russia Sanctions Regime in WorldECR

April 12 2022

This article was originally published in WorldECR's Issue 108, published April 2022. 

Recent developments in the UK’s Russia Sanctions Regime

The armed conflict between Russia and Ukraine has led to some of the most draconian economic sanctions ever imposed against a UN member state - and the most significant against one of the five permanent members of the UN Security Council.

In implementing these sanctions at great speed, the United States, the European Union, and many other countries have introduced or significantly expanded existing sanctions against Russia: its central bank, as well as its financial and banking system have all been targeted. The situation is constantly evolving.

As with all sanctions imposed by one country against another, they are designed to constrain and deter Russia and force a change in behaviour by its leadership. As part of a co-ordinated response, the UK has joined the US and the EU in imposing comparable sanctions, including measures against Russia’s central bank and financial sector, as well as freezing the assets of individuals and companies.

The UK establishes sanctions regimes under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), the Export Control Order 2008 and the Anti-Terrorism, Crime and Security Act 2001. So far, UK sanctions against Russia (the Russian (Sanctions) (EU Exit) Regulations 2019), have already been amended six times this year, progressively including new and broader sanctions against Russia, its entities and nationals.

UK entities and individuals therefore need to be aware of the increased sanctions risk and consider them carefully when conducting the relevant due diligence checks.

New regulations

The first amendment of this year on the Russia Sanctions Regulations came into force on 10 February 2022, extending the UK’s designation criteria so that the UK Government can now sanction an “involved person” by name. The term can now include a person who is, or has been, involved in obtaining a benefit from or supporting the Russian Government: a wide provision which could have a broader impact on who can be sanctioned.

Being ‘involved’ also covers a broad spectrum: carrying on business with a Russian Government affiliated entity, doing business of economic or strategic significance to the Government of Russia across a wide range of sectors, or with a person “owning or controlling directly or indirectly or working as a director, trustee or equivalent of a Government of Russia-affiliated entity”, among others. Notably, the term “Government of Russia” includes not only the Presidency and public bodies and agencies, but also the central bank.

The new regulations fall under three general headings: financial, trade and shipping. For the purposes of these regulations, a person “connected with Russia” means an individual or a group of individuals who are ordinarily resident in Russia or located in Russia, or an entity which is incorporated or constituted under the law of Russia, or is domiciled in Russia.

Financial Sanctions

New financial sanctions include prohibitions to deal with certain transferable securities or money-market instruments, to grant or issue certain loans or credits, to establish or continue certain correspondent banking relationships or to process some sterling payments, and to provide financial services for the purpose of foreign exchange reserve and asset management to certain persons.

The transferable securities or money-market instruments subject to prohibition include the following: Sberbank, VTB Bank, Gazprombank, Vnesheconombank, Rosselkhozbank, OPK Oboronprom, United Aircraft Corporation, Uralvagonzavod, Rosneft, Transneft and Gazprom Neft.


Extending the current restrictions, the new trade sanctions incorporate “critical-industry” goods and technology, dual-use goods and technology and aviation and space goods and technology. Critical-industry goods and technology include certain electronics, computers, telecommunication equipment, information security, sensors and lasers, navigation and avionics equipment, marine systems and aerospace and propulsion equipment, as well as related software and technologies. On aviation and space goods and technology, there is an additional prohibition to provide insurance or reinsurance services relating to them to a person connected with Russia or for use in Russia.

Shipping and Aircraft

The new shipping sanctions prohibit access or entry to a port in the United Kingdom to ships that are owned, controlled, chartered or operated by a designated person or by persons connected with Russia, flying the flag of Russia, specified ships, or ships which are registered in Russia. The registration of such ships can be terminated by the Secretary of State.

Aircrafts owned, chartered or operated by a designated person or a person connected with Russia or registered in Russia are banned to overfly or land in the UK.


Sanctions are sometimes dismissed as token gestures, but no-one can doubt the significance of their effect on the sanctioned country, which could ultimately lead to a severe economic recession, according to economic commentators. 

Soon after they were imposed, the FT reported that ‘sanctions are blowing holes in the Russian economy. World powers led by the US have imposed curbs ranging from an overseas asset freeze on the Russian central bank to a ban on buying sparkling wine from a bottler in Crimea. The rouble has collapsed, bond default risk has spiked, the Moscow stock exchange has closed and Russian oil trades at ever-deeper discounts to Brent.’

However well-intentioned they may be, enforcing sanctions is not always easy to achieve. Popular among Russian oligarchs, luxury yachts are a case in point. In France, Spain, Italy and Gibraltar, yachts belonging to Igor Sechin, Andrey Melnichenko, Sergei Chemezov, Alexander Mikheyev, Gennady Timchenko and Alexei Mordashov, and Dmitry Pumpyansky have already been seized. But many more yachts owned by those on the various sanctions lists have not. 

Getting around sanctions

Equally, some individuals have circumvented or pre-empted the new sanctions regimes. Among them is Alisher Usmanov, whose wealth is estimated to be $18.4bn (£14bn). On 3 March, he was added to the UK list of sanctioned Russian businessmen.

But a spokesman for Usmanov recently told the BBC that most of his UK property, as well as his yacht, had already been “transferred into irrevocable trusts” which cannot be amended, modified, or revoked after they are created. When the assets were transferred, Usmanov no longer owned them, his spokesman said. “Nor was he able to manage them or deal with their sale, but could only use them on a rental basis; Mr Usmanov withdrew from the beneficiaries of the trusts, donating his beneficial rights to his family," he added.

This raises questions over the potential effectiveness of sanctions. So beyond enforcement challenges, how effective might the most comprehensive sanctions imposed against a major power for nearly a century prove to be?

Time will tell whether these sanctions have achieved the purpose for which they were imposed.

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