The UK's Economic Crime (Transparency and Enforcement) Bill, which is being fast-tracked through Parliament "in consequence of recent events in Ukraine", is designed to make changes to help deter and prevent breaches of financial sanctions.
Business Secretary Kwasi Kwarteng said that the Bill was being introduced now to dissuade people from seeking to launder money in the UK, particularly those linked to Russian President Vladimir Putin, and its main objectives include amending the UK's financial sanctions legislation, including the test for imposing monetary penalties and powers, to publicly name those breaching financial sanctions. This will make it easier for the government to act against those who fail to comply with sanctions.
This is a summary of the sanctions relevant changes:
The legislative amendments are intended to expedite the imposition of sanctions and reduce the resources required to react quickly to developments.
The UK may now adopt autonomous sanctions (i.e. other than in compliance with a UN or other international obligation) where it is appropriate to do so for a particular purpose set out in the Sanctions and Anti-Money Laundering Act (SAMLA). There is no longer any requirement for the Government to consider whether there are good reasons to pursue that purpose or whether the imposition of sanctions is a reasonable course of action for that purpose.
The requirement for a designation to be "appropriate", which is often a question of proportionality, has also been removed.
A new urgent designation procedure has been adopted to enable the UK to designate individuals and entities (by name or description) if they have been designated by the USA, the EU, Australia or Canada (and potentially other countries in future) under a similar sanctions regime and the relevant Government Minister considers that it is in the public interest to use the urgent procedure.
Any such designation can only last for a maximum of 112 days at which point it will cease to have effect unless the Minister certifies that there are reasonable grounds to suspect that the person meets the criteria for designation under the UK sanctions regime.
The Government has also been given the flexibility of designating by description (e.g. groups or bodies of individuals) even where it is practicable to identify and designate the relevant persons by name.
The Office of Financial Sanctions Implementation (OFSI) helps to ensure that financial sanctions are properly understood, implemented and enforced in the United Kingdom. OFSI will now be able to publicly name companies that have breached sanctions, but have not been fined.
The Economic Crime (Transparency and Enforcement) Act also limits the power of the court to award damages to those challenging designation to cases of bad faith (rather than negligence) and by giving the UK the power to place a cap on any damages awarded (no such cap has yet been proposed). These limitations will not apply to proceedings commenced before 4 March 2022.
It's also apparent that other jurisdictions will be obliged to follow the UK. Discussions are already underway with the UK government for Registers of Beneficial Ownership in British Overseas Territories (including the BVI, Gibraltar, Cayman Islands and Turks & Caicos Islands) and the Crown Dependencies (Isle of Man, Jersey and Guernsey) to be made public by the end of 2023.
These reforms will form part of a second Economic Crime Bill that is expected in the coming months. Other measures to be included in the second Bill include new powers to seize crypto assets, enhanced anti-money laundering powers to encourage businesses to share information on suspected economic crime, and measures to restrict the misuse of limited partnerships.
ILP is working with the UK Anti-Corruption Coalition (UKACC) and REDRESS to improve the effectiveness of the UK’s Global Anti-Corruption Sanctions regime (UK GACS regime) to achieve a number of strategic sanctions designations to limit opportunities for kleptocrats to launder their wealth in the UK financial system. We specifically work on legal research and opinions; giving workshops to civil society and activists the world over informing them of the best ways to use the UK GACS regime and mobilising pro bono sanctions lawyers to support civil society drafting of sanctions dossiers, guiding them through the process from evidence-gathering to submission to government.
Source and original article from Stephenson Harwood LLP. Please find it here.