Clifford Chance

On 22 February 2023, the UK Government published a sanctions strategy paper titled ‘Deter, Disrupt and Demonstrate – UK sanctions in a contested world’ setting out the UK's approach to sanctions.

The publication coincides with the two-year anniversary of Russian's invasion of Ukraine. The paper sets out the UK's approach to using and implementing sanctions as a foreign and security policy tool.

The paper includes a number of case studies and sets out:

• the foundations and core considerations underpinning the UK's sanction system (Section 1);
• an explanation as to how the UK sanctions regime support its foreign policy priorities (Section 2);
• an update of how the UK works alongside international actors, the private sector, civil society and other stakeholders to support its sanctions policy (Section 3);
• a description of the UK's sanctions system (Section 4); and
• details of an enhanced approach across government to reinforce sanctions implementation and enforcement (Section 5).

The paper further provides a map of UK sanctions regimes (Annex 1), a summary of sanctions-related roles and responsibilities across the UK Government (Annex 2), and examples of activities funded through the Economic Deterrence Initiative, which the government considers is central to improved sanctions implementation (Annex 3).

The strategy paper sets out the ways in which the UK proposes to use sanctions to:

• undermine Russia’s ability to fund and wage its war against Ukraine, including by cracking down on efforts to get around sanctions;
• address threats and malign activity through geographic and thematic sanctions regimes;
• build international coalitions and take co-ordinated action with allies and partners to maximise the impact of the UK's sanctions while deepening engagement with business, financial institutions and other stakeholders; and
• reinforce sanctions implementation and enforcement, including by helping UK businesses to understand and comply with sanctions and by taking robust action on non-compliance.

Enforcement

The UK Government's proposals regarding enforcement of sanctions are set out in Section 5 and involve:

• Cross-departmental collaboration on sanctions policy, design, targeting, implementation, enforcement and lifting.
• Mobilising the expertise of multiple departments, agencies and regulators which are responsible for enforcement of sanctions, including OTSI, which is intended to work closely with HM Revenue and Customs who enforce sanctions on the import and export of goods at the UK border.
• Working with the UK Overseas Territories and Crown Dependencies, which enforce UK sanctions in their jurisdiction.
• Continuing to invest in sanctions staffing and expertise across government.
• Continuing projects, including the development of wider economic tools designed to strengthen the UK's economic security, under the Economic Deterrence Initiative.

Next steps

The strategy paper sets out the following proposals to be introduced in 2024:

• A new Office of Trade Sanctions Implementation in the Department for Business and Trade will be responsible for the implementation and enforcement of certain trade sanctions, working closely with HM Revenue and Customs who enforce sanctions on the import and export of goods at the UK border.
• A new type of prohibition across the UK's sanctions regimes making it unlawful for a designated party under the UK’s autonomous sanctions regimes to act as a director of a UK company.
• New legislation to introduce a humanitarian ‘exception’ across the UK’s financial sanctions, which will provide further assurances to humanitarian actors and the financial sector.

The UK Government also announced new sanctions on Russia on the same day the Sanctions Strategy paper was issued. The new UK sanctions include companies linked to manufacturing munitions, importers and manufacturers of machine tools, diamond companies and producers, and five senior executives or owners of Russia’s top copper, zinc, and steel producers. Sanctions relating to Oil traders, shipping companies, and companies and directors involved in Liquified Natural Gas (LNG) production.