On 21 July 2022, the UK's recent sanctions against Russia came into force. This latest round of sanctions impacts the oil, insurance, energy, gold and coal markets, as well as providing for certain restrictions on the provision of professional and business services to Russia. Whilst broadly looking to align themselves with existing EU sanctions, there are notable differences between how these UK sanctions will be applied which are now discussed within this update.
UK Oil Ban
The new restrictions are introduced under The Russia (Sanctions) (EU Exit) (Amendment) (No.14) Regulations 2022 (the "UK 14th Amendment") which amend the Russia (Sanctions) (EU Exit) Regulations 2019 (as amended, the "UK Regulations"). The UK 14th Amendment introduces, amongst other things, a prohibition on (1) the import, acquisition and supply or delivery of Russian oil and oil products into the UK, and (2) the provision of technical, financial and brokering assistance relating to such products destined for the UK.
The oil ban comes into force on 31 December 2022 and, broadly speaking, brings the UK in line with Article 3m of Council Regulation (EU) 833/2014 (as amended, the "EU Regulations").
Impact on UK Insurance Sector
The restriction on providing financial services to oil and oil products has implications for the UK's insurance sector, given that the definition of "financial services" includes the provision of insurance and reinsurance services (as defined under Section 61(1)(a) of the Sanctions and Anti-Money Laundering Act 2018).
As a result, from 31 December 2022, UK insurers will be prohibited from providing insurance services in respect of the import, acquisition and supply or delivery of the listed oil and oil products that originate in Russia or are located in Russia, that are destined for the UK.
Notably, however, there is no equivalent UK restriction to that of Article 3n of the EU Regulations.
There are limited exceptions to the oil ban, including if the oil and oil products are cumulatively: (i) non-Russian origin; (ii) not owned by a person connected with Russia; and (iii) only being loaded in, departing from or transiting through Russia.
Further, the prohibitions will not apply to products necessary for the purposes of a UK petroleum project, meaning an oil or gas exploration or production project that is wholly or partially located within the United Kingdom or other specified areas.
Alignment with EU Oil Ban
There are subtle differences between the two jurisdictions' restrictions. For example, the EU restrictions are limited to oil products under commodity codes 2709 00 (crude) and 2710 (other petroleum oils). Meanwhile, the UK sanctions include a significantly broader list, comprising products falling under commodity codes 2709 to 2715 (including petroleum gases and jelly), 2207 (ethyl alcohol) and 3826 (biodiesel oil).
Further, whilst the EU sanctions separate the wind-down periods for CN Code 2709 (crude, 5 December 2022) and CN Code 2710 (certain petroleum oils, 5 February 2023), the expansive list of oil and oil products under the UK restrictions are simply prohibited from 31 December 2022. Accordingly, under the UK rules, all transactions caught by the new restrictions described above must be concluded by 30 December 2022.
G7 dependencies and further goods list
From 21 July 2022, there is a prohibition on the export, supply and delivery, and making available of goods (as well as related technical assistance, financial services and funds, and brokering services), to, or for use in Russia, of a list of goods known as the "G7dependencies and further goods list".
The list of goods, which the UK 14th Amendment introduces as a new Schedule 3E to the UK Regulations, is wide-ranging and includes chemicals, materials, machinery goods and electrical appliances. The goods have been targeted as items of significant importance to the Russian economy and goods for which Russia particularly depends on the UK and G7 partners. This list closely mirrors that of the list of prohibited products under Article 3k as listed under Annex XXIII of the EU Regulations.
An exception applies for certain diplomatic missions, consular
posts and international organisations and their staff afforded
immunities under international law.
From 21 July 2022, there is a prohibition on the import, acquisition and supply or delivery of gold originating in Russia into the UK. Further, there are similar prohibitions on the provision of related technical assistance, financial services, funds, and brokering services. On 21 July 2022, the EU also introduced a ban on Russian gold under Regulation (EU) 2022/1269 (Article 3o) which is however, more wide ranging and also impacts restricted gold products destined for third countries.
As with the G7 goods, an exception applies to certain diplomatic missions, consular posts and organisations afforded immunity.
From 10 August 2022, there is a prohibition on the import, acquisition and supply or delivery of coal and coal products into the UK. This is a coordinated ban with the EU, since under EU sanctions the winding-down period for purchasing, importing or transferring coal into the EU under pre-existing contracts pre-dating 9 April 2022 expires on 10 August 2022 (see Article 3j(3) of the EU Regulations).
Amendments to energy-related goods and services
The UK 14th Amendment also expands the existing prohibitions on energy-related goods and technology.
These prohibitions take effect immediately as amendments to existing restrictions.
Professional and business services
From 21 July 2022, there is a prohibition on the provision (directly or indirectly) of accounting, business and management consulting, and public relations services to persons connected to Russia (which broadly speaking includes Russian nationals and companies incorporated under the laws of Russia (including Russian affiliates of non-Russian entities)).
There are certain exemptions that may be applicable to UK persons for example services being provided to discharge or comply with UK statutory or regulatory obligations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.