On July 21, 2022, recent UK sanctions against Russia came into effect. This latest round of sanctions impacts the oil, insurance, power, gold and coal markets, and includes certain restrictions on the supply of professional and business services to Russia. While broadly seeking to align with existing EU sanctions, there are notable differences in how these UK sanctions will be applied, which are now addressed in this update.
UK oil ban
The new restrictions are introduced under the Russia (Sanctions) (Leaving the EU) (Amendment) Regulations 2022 (No. 14) (the “UK 14th Amendment“) which amend the Russia (Sanctions) (Leaving the EU) Regulations 2019 (as amended, the “UK regulations“). The 14th Amendment of the United Kingdom introduces, among other things, a prohibition (1) on the importation, acquisition and supply or delivery of Russian petroleum and petroleum products
United Kingdomand (2) the provision of technical, financial and brokerage assistance relating to such products.
The oil ban comes into force on 31 December 2022 and generally brings the UK into compliance with Article 3m of Council Regulation (EU) 833/2014 (as amended, “EU regulations“).
Impact on the UK insurance industry
The restriction on the supply of oil and petroleum products financial services has implications for the UK insurance sector, as the definition of “financial services” includes the supply of insurance and reinsurance services (as defined in section 61(1)(a) of the Anti-Money Laundering Sanctions Act 2018).
Accordingly, from 31 December 2022, UK insurers will be prohibited from providing insurance services relating to the importation, acquisition and supply or delivery of listed petroleum and petroleum products originating in or located in Russia. Russia, which are destined for Great Britain.
Notably, however, there is no UK restriction equivalent to that of Article 3n of the EU regulations.
There are limited exceptions to the petroleum ban, including if the petroleum and petroleum products are cumulatively: (i) of non-Russian origin; (ii) not owned by a Russian-related person; and (iii) only while being loaded, on departure from or in transit through Russia.
In addition, the prohibitions will not apply to products necessary for the purposes of an oil project in the United Kingdom, i.e. a project for the exploration or production of oil or gas wholly or partly located in UK or other specified areas.
Alignment with EU oil ban
There are subtle differences between the restrictions of the two jurisdictions. For example, EU restrictions are limited to petroleum products under commodity codes 2709 00 (crude) and 2710 (other petroleum oils). Meanwhile, UK sanctions include a much wider list, including products falling under product codes 2709 to 2715 (including petroleum gases and jelly), 2207 (ethyl alcohol) and 3826 (biodiesel oil).
Additionally, while EU sanctions separate liquidation periods for CN code 2709 (crude, 5 December 2022) and CN code 2710 (certain petroleum oils, 5 February 2023), the long list of petroleum and of petroleum products subject to UK restrictions is simply prohibited from 31 December 2022. As a result, under UK rules, all transactions subject to the new restrictions described above must be concluded by 30 December 2022.
G7 Dependencies and Other Commodity Lists
From July 21, 2022, it is prohibited to export, supply and deliver, and make available goods (together with technical assistance, financial services and related funds and brokerage services), to or for use in Russia, a list of goods known as the “List of G7 Dependencies and Other Goods”.
The list of goods, which the UK’s 14th Amendment introduces as a new Schedule 3E to the UK Regulations, is extensive and includes chemicals, materials, machinery and electrical appliances. The goods were targeted as items of significant importance to the Russian economy and goods for which Russia is particularly dependent on the UK and G7 partners. This list closely mirrors that of the list of prohibited products under Article 3k as listed in Annex XXIII of the EU Regulations.
An exception applies to certain diplomatic missions, consular posts and international organizations and their personnel enjoying immunities under international law.
From July 21, 2022 there is a ban on importing, acquiring and supplying or delivering gold originating in Russia to the UK. In addition, there are similar prohibitions on the provision of technical assistance, financial services, funds, and related brokerage services. On 21 July 2022 the EU also introduced a ban on Russian gold under Regulation (EU) 2022/1269 (article 3o) which is however broader and also has an impact on restricted gold products intended for third countries.
As with G7 property, an exception applies to certain diplomatic missions, consular posts and organizations benefiting from immunity.
From 10 August 2022 there is a ban on importing, acquiring and supplying or delivering coal and coal products into the UK. This is a coordinated ban with the EU, given that under EU sanctions, the reduction period for the purchase, import or transfer of coal into the EU in the framework of pre-existing contracts prior to April 9, 2022 expires on August 10, 2022 (see Article 3 undecies, paragraph 3) of the EU Regulation).
Changes to energy-related goods and services
The UK’s 14th Amendment also extends existing bans on energy-related goods and technologies.
These prohibitions take effect immediately as changes to existing restrictions.
Professional and business services
From July 21, 2022, it is prohibited to provide (directly or indirectly) accounting, business and management consulting and public relations services to persons connected with Russia (which generally includes nationals entities and companies incorporated under the laws of Russia (including Russian subsidiaries of non-Russian entities)).
Certain exemptions may apply to UK persons, for example services provided to carry out or comply with UK legal or regulatory obligations.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.