Sanctions and Embargoes
The United Kingdom imposes sanctions and embargoes to further its Common Foreign and Security Policy objectives. The United Kingdom implements sanctions through the Anti-Money Laundering Act 2018 (the Sanctions Act) which came into force on 31 December 2020. The Sanctions Act provides the main legal framework for UK sanctions.
UN and EU sanctions become part of UK domestic law by the passing of statutory instruments (SIs). The SI will detail the nature and scope of the sanction and list any criminal offences that may arise from a breach of it.
Sanctions' principal purpose is usually to change the behaviour of the target country's regimes, individuals or groups. Sanctions may also be aimed at preventing weapons from falling into the wrong hands, disrupting terrorist operations, or trying to change the policies and actions of the target.
The most commonly applied measures are:
- Embargoes on exporting or supplying arms and associated technical assistance, training and financing;
- Bans on exporting equipment that might be used for internal repression;
- Financial sanctions on individuals in government, government bodies and associated companies, or terrorist groups and individuals associated with those groups;
- Travel bans on named individuals;
- Bans on imports of raw materials or goods from the sanctions target;
- Other measures may be applied according to individual circumstances.
A number of government departments play a role in the sanctions’ regime. The Foreign & Commonwealth Office has overall responsibility for the UK's policy on sanctions and embargoes. HM Treasury controls the sanctions list. A unit within the Treasury, Office for Financial Sanctions Implementation (OFSI) publishes the updated list and is responsible for guidance and monetary penalties and the Department of Business, Innovation and Skills (BIS) administers export controls through the Export Control Joint Unit (ECJU).
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers and enforces embargoes and economic sanctions programmes under the Foreign Assets Control Regulations (FACR).
OFAC sanctions complement US export control regulations administered by other agencies, and companies must always consider OFAC sanctions regardless of whether or not a transaction is subject to the EAR or the ITAR.
OFAC sanctions apply to US persons, as well as to non-US persons that engage in transactions involving US-origin goods, or goods otherwise subject to the EAR. OFAC sanctions also apply to non-US persons that cause actions to occur within the US or by US persons in respect of transactions prohibited by US sanctions.
Comprehensive sanctions programmes prohibit virtually all types of activities with the target, which is generally a country and its current government regime. Regime-based sanctions do not target the country as a whole but prohibit transactions with specified governments, agencies, instrumentalities, and regime members within a country that are generally designated on OFAC’s Specially Designated Nationals List. OFAC enforces list-based programmes that target specific individuals, entities, or organizations, and even industries within certain countries (such as energy, defence, and financial sectors).
The countries subject to comprehensive US sanctions are Crimea, Cuba, Iran, North Korea and Syria.
US sanctions programmes also impose limited but significant sanctions against government regimes and regime members of a number of countries, including but not limited to Belarus, Hong Kong, Iraq, Libya Russia (Ukraine related), Venezuela etc...
OFAC’s main list of entities and individuals connected with sanctions targets is the Specially Designated Nationals and Blocked Persons List (SDN list).
OFAC also blocks certain entities owned by persons or entities on the SDN list even if that entity is not separately named on the SDN list.
Also, under certain sanctions programmes, non-US persons can be subjected to secondary sanctions. Secondary sanctions target non-US persons for engaging in certain activities contrary to US policy objectives, such as conducting business that benefits a sanctioned country or person, even if the activities have no US nexus. Foreign companies that engage in these types of activities can become subject to various measures, which may include the US government adding them to the SDN list or restricting their access to the US financial system.
Criminal penalties for wilful violation of the OFAC can include fines ranging up to $1 million per violation with the possibility of imprisonment for 20 years, or both. Civil penalties vary considerably.
Andrew Skinner is an experienced regulatory trade lawyer (Solicitor) and has worked as an in-house lawyer for a global technology company, as well as in private practice. He is also a professionally qualified engineer and registered with the UK’s Engineering Council as a Chartered Engineer (CEng). Andrew advises clients on a range of trade compliance issues in various sectors, including electronics, aerospace & defence, cosmetics, IT, automotive, nuclear engineering and industrial engineering, delivering timely pragmatic advice in a way that recognises the commercial demands faced by clients.