The recent conflicts in the Ukraine and Gaza have brought sanctions into the spotlight. Even with all of the information that is freely available to businesses, organisations are still breaching the UK sanctions regime and being fined heavily for it. Are you making the necessary sanctions checks before offering goods or services to foreign nationals or to legal persons based in foreign states?
Types of UK Business Sanctions Under SAMLA
The Sanctions and Anti-Money Laundering Act 2018 (SAMLA) provides power to the relevant secretary of state to make regulations imposing sanctions. The sanctions which apply to a specific territory or issue are known as a regime. For example, there are regimes in place covering Russia and North Korea. These are both examples of “individual” regimes.
The types of sanctions that can be applied under SAMLA are:
- – Financial sanctions.
- – Immigration sanctions.
- – Trade sanctions.
- – Aircraft sanctions.
- – Shipping sanctions.
- – Sanctions for purposes of UN obligations
Some sanctions apply to designated persons and other sanctions may apply in relation to a particular territory or country. E.g. Asset freezes and travel bans apply to designated persons, whereas import and export prohibitions may apply to a country or territory.
How to Ensure Sanctions Compliance for UK Businesses
Before entering into a relationship with any legal person (this includes corporate entities), you should be checking the UK Sanctions List to see if that legal person has been sanctioned. You should also be checking the List of Sanctions Regimes available at GOV.UK to determine if the country where your client is based is subject to UK sanctions and to also find out if any of the other countries involved in the transaction have also been sanctioned.
Legal Risks of Breaching UK Sanctions Regulations
Breaching any sanctions regime is a criminal offence. Persons can be prosecuted. Acting in the course of your employment when breaching the regime, does not prevent the relevant authority from pursuing you and/or your employer for the breach.
In you are convicted on indictment this could result in a 10 year prison sentence. In respect of financial penalties, the Office of Financial Sanctions Implementation can levy a maximum fine of the greater of £1million or 50% of the value funds or resources, where the breach or failure relates to particular funds or economic resources and it is possible to estimate the value of such funds or economic resources.
Lack of care in respect of the sanctions regime can not only seriously undermine the financial position of a business but depending on the nature of breach, can cause irreparable damage to a business’ reputation. So it is vital that business owners understand their responsibilities in this area!
For more information, please contact James Thornton Associate Solicitor and Head of our Dispute Resolution Department JThorton@fionabruce.co.uk
The contents of this post do not constitute legal advice and are provided for general information purposes only ■
