Sanctions

Overview of the UK sanctions regime

Sanctions are restrictive measures that can be put in place to fulfil a range of purposes. In the UK, these include complying with UN and other international obligations, supporting foreign policy and national security objectives, as well as maintaining international peace and security, and preventing terrorism.

The prohibitions and requirements in these Regulations apply to conduct by all UK persons, including all barristers and BSB entities.

Sanctions measures cover:

• financial sanctions, including asset freezes
• immigration sanctions, known as travel bans
• aircraft and shipping sanctions
• trade sanctions

Depending on your area of practice, you may need to be aware of the different types of sanctions, which are implemented and enforced through different Government departments. You can read more about all of these sanctions on the Government’s website.

The information on this page mainly concerns financial sanctions, which could be relevant to a range of practice areas. These are implemented and enforced by HM Treasury through its Office of Financial Sanctions Implementation (OFSI). Breach of financial sanctions is a strict liability offence, so all barristers should ensure that they know and understand their exposure and their obligations.

Financial sanctions rose in prominence following the invasion of Ukraine in 2022. An unprecedented tranche of sanctions was imposed by the UK on Russia on 22 February 2022, with further additions throughout the year. The government maintains a Sanctions List which consolidates the people, entities and ships subject to sanctions by the UK. You can access this list, register for updates and obtain further information on financial restrictions. Please note that the US Office of Foreign Assets Control sanctions lists and regimes are not included in this list, but may apply to your practice. 

You should ensure that you monitor the list for updates as it is subject to frequent change. You can sign up for OFSI alerts. 

Key information in relation to financial sanctions can be found as follows:

• UK Sanctions List  
• Current UK sanctions regime  
• Sign up for OFSI alerts 
• OFSI guidance 
• Russia sanctions regime: industry and specialist guidance  
• Apply for a licence for legal fees 
• General licences 
• Make a report to OFSI if you suspect a sanction has been breached 
• UK Financial Sanctions FAQs 
• Legal Services Threat Assessment Report 

A Statutory Instrument came into effect on 30 June 2023; the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2023 prevents lawyers, including barristers, from providing legal advisory services, directly or indirectly, in relation to certain financial or trade activity. Barristers must not provide legal advisory services to any person who is not a UK person in relation to, or in connection with, specified activity which would be prohibited under the UK sanctions regime if the activity was done by a UK person or was taking place in the UK.

“Legal advisory services”

1. means the provision of legal advice to a client in non-contentious matters, involving any of the following:

1. the application or interpretation of law;
2. acting on behalf of a client, or providing advice on or in connection with, a commercial transaction, negotiation or any other dealing with a third party;
3. the preparation, execution or verification of a legal document;

2. do not include any representation, advice, preparation of documents or verification of documents undertaken as part of legal representation services provided in, or in anticipation of

1. any proceedings before administrative agencies, courts or other duly constituted official tribunals, or
2. arbitral or mediation proceedings.

The Government has confirmed that “The restrictions on legal services do not include legal representation for Russian nationals using UK legal expertise, ensuring that allowing everyone to access legal support remains a core aspect of the rule of law across the UK.”

Standards of due diligence expected by OFSI

In March 2023, OFSI updated its guidance on enforcement and monetary penalties for sanctions breaches. In particular, chapter 3 has been updated to reflect what mitigating or aggravating factors OFSI takes into consideration about the degree and quality of research and due diligence conducted on ownership and control when they determine that there has been an incorrect assessment that resulted in a breach. See the section below on Policies and Procedures for further information, but you should read OFSI’s detailed guidance in full to ensure that you have appropriate procedures in place.

Ban on Trust services

On 16 December 2022, the government introduced prohibitions on providing trust services to or for the benefit of persons connected with Russia and designated persons.

In particular, a UK person anywhere, or person within the UK, must not provide trust services:

• to or for the benefit of a person connected with Russia unless pursuant to an ongoing arrangement pursuant to which that person provided those services to or for the benefit of the person connected with Russia immediately prior to 16 December 2022;
• to or for the benefit of a person designated for the purposes of regulation 18C (trust services).

The provision of trust services means:

• creating a trust or similar arrangement;
• providing a registered office, business address, correspondence address, or administrative address for a trust or similar arrangement;
• operating or managing a trust or similar arrangement; or
• acting or arranging for another person to act as a trustee of a trust of similar arrangement.

Further details can be found in The Russia (Sanctions) (EU Exit) (Amendment) (No. 17) Regulations 2022 (Regulation 18C) and in OFSI’s Russia guidance

On 21 March 2023, the persons that are currently designated under Regulation 11 (asset freeze) of the Regulations are now also designated under Regulation 18C (trust services). This means that it is now prohibited to provide trust services to or for the benefit of these persons, unless permitted by a licence or there is an applicable exception.

Policies and Procedures

Breaching sanctions can result in criminal prosecution or a fine by OFSI. Core Duty 10 says that you must take reasonable steps to manage your practice, or carry out your role within your practice, competently and in such a way as to achieve compliance with your legal and regulatory obligations. You should therefore ensure that you have procedures in place to enable you to comply with sanctions.

OFSI explains in its financial sanctions enforcement and monetary penalties guidance  about how it responds to breaches: “when we consider what action to take, we take into account the level of actual and expected knowledge of financial sanctions held by an individual or a company, considering the kind of work they do and their exposure to financial sanctions risk. Regulated professionals should meet regulatory and professional standards. We may consider their failure to do so an aggravating factor."

The Economic Crime (Transparency and Enforcement Act) 2022 amends the Treasury’s powers for issuing civil monetary penalties for sanctions breaches by removing the requirement to prove that the person had knowledge or reasonable cause to suspect their activity breached sanctions. The Act also enables OFSI to publicise details of sanctions breaches.

OFSI does not prescribe the level or type of due diligence to be undertaken to ensure compliance with financial sanctions. However, in March 2023, OFSI updated this guidance to set out what mitigating or aggravating factors it will consider in the event of a breach, when assessing the degree and quality of research and due diligence conducted on ownership and control. OFSI will consider whether the level of due diligence conducted was appropriate to the degree of sanctions risk and nature of the transaction. It would expect to see evidence of a decision making process that took account of the sanctions risk and considered what would be an appropriate level of due diligence in light of that risk. OFSI would usually expect these decisions to be made by reference to an internal framework or policy. You should read the guidance for full details of the type of checks that OFSI would expect to see evidence of.

All barristers and BSB entities should assess their own exposure and put in place processes to check sanctions that are in force to manage any identified or anticipated risks of breaching sanctions. The BSB’s Supervision Team, when reviewing the policies and processes that you have in place to ensure compliance, will consider the following:

• What is the risk that, in your practice, you will engage with clients that are subject to sanctions? Have you conducted a risk assessment and how is it kept up to date?
• What processes do you have in place to make yourself aware of current sanctions that are in place and how do you keep up to date with changes?
• What processes are in place to check the consolidated list of sanctions when engaging with a new client?
• Do you take a risk-based approach? For example, are there enhanced due diligence checks for clients (and their beneficial owners) from countries that are covered by the sanctions regime?
• Have you documented your policy and processes for screening clients (and their beneficial owners) and ensured that relevant persons (for example clerks that may carry out some of these processes for you) have received appropriate training?
• When are clients screened? Are any long-standing clients regularly screened where appropriate?

If you use electronic identification and verification tools to conduct sanction checks, please refer to Part 1, chapter 7 of the Anti-Money Laundering Guidance for the legal sector. This contains additional information to help you manage risk if you use third party services or tools to conduct your sanctions checks.

If you think you may be conducting business or anticipate conducting business with individuals or organisations subject to financial sanctions:

• contact OFSI immediately; and
• consider if you should apply for a licence from OFSI

Licences to undertake transactions with, or on behalf of persons or entities subject to sanctions

There are some exemptions for which you can seek a licence from OFSI. These include applying for a licence in order to receive reasonable fees for the provision of legal advice. OFSI will judge whether the fees are reasonable. See OFSI's website for further information on obtaining a licence to undertake transactions with, or on behalf of persons or entities subject to sanctions.

OFSI has the power to issue General Licences for country sanctions regimes under regulations made under the Sanctions and Anti-Money Laundering Act 2018.

A General Licence means that a barrister or BSB entity who has provided legal advice to a designatedperson in relation to the regime(s) listed in the Licence will not have to wait for an OFSI specific licence before they can receive payment from that designated person, provided that the terms of the general licence are met. There remains an obligation to make a report to OFSI. 

Anyone wanting to make use of these permissions should carefully consider the terms of the General Licence before doing so. 

A full list of general licences is on the OFSI website.

Reporting obligations

Independent legal professionals (ie all barristers and BSB entities) are subject to certain reporting obligations. You must inform OFSI promptly if you know or reasonably suspect that a person is a designated person or has committed offences under sanctions regulations, where that information is received in the course of carrying on business.

More information about your obligations and how to make a report can is on the OFSI website.