Following Russia's annexation of Crimea in 2014, the EU (which then included the UK) and the US introduced a raft of economic sanctions against Russia, blacklisting hundreds of persons and entities (who were banned from travelling to the EU and US and whose assets were frozen), imposing a trade ban on Crimea and restricting dealings with the energy, defence and financial sectors.
Post Brexit, the UK incorporated the EU's restrictive measures into domestic law in the form of the Russia (Sanctions) (EU Exit) Regulations 2019 (the "2019 Regulations").
Notwithstanding the 2019 Regulations, Russia has continued to pursue a pattern of aggressive behaviour towards Ukraine, including the recent build-up of troops on Ukraine's territorial borders and in Crimea.
The UK Government has repeatedly called on Russia to cease its aggressive action towards Ukraine and to immediately de-escalate the dispute in line with its international commitments, including the Minsk Protocols.
To that end, the UK Government passed new legislation on 10 February 2022 - the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 (the "2022 Regulations") – to broaden the criteria pursuant to which it may designate Russian persons.
The 2022 Regulations allow the UK Government to designate individuals or entities that are, or have been, involved in obtaining a benefit from or supporting the Government of Russia.
This includes: carrying on business as an entity affiliated to the Russian Government; carrying on business of economic significance to the Russian Government; carrying on business in a sector of strategic significance to the Russian Government; as well as owning or controlling directly or indirectly, or working as a director, trustee or equivalent of such entities.
Yesterday, however, President Putin ordered Russian troops and tanks to enter Ukraine’s eastern regions under the pretext of a peacekeeping mission. The UK Government regards this as a de facto military invasion of Ukraine.
Today, the UK Government has named five Russian banks and three individuals as "designated persons" in response to the invasion. The five Russian banks are:
- IS Bank
- Rossiya Bank
- PJSC Promsvyazbank
- JSC Genbank
- JSC Black Sea Bank
The three designated individuals are:
- Gennadiy Timchenko
- Boris Rotenberg
- Igor Rotenberg
UK persons are now prohibited from dealing with funds or economic resources belonging to the above designated persons and making funds or economic resources available to them.
We see this as a limited first step by the UK Government in response to Russia's continued aggression against Ukraine. It is notable that a number of Russian banks with connections to the EU and Switzerland have not yet been targeted by the UK Government.
In addition, the UK has not yet imposed (i) restrictions on the purchase of oil or gas from Russia's energy companies, (ii) targeted export controls restricting the export of commodities to Russia, (iii) restricted access to the SWIFT financial system, (iv) restrictions on the ability of Russian companies to access the UK's capital markets, or (v) much wider designation of individuals connected to the Kremlin.
We expect the UK to follow a policy of gradual escalation pursuant to which further Russian aggression against Ukraine or a refusal by Russia to withdraw its troops will result in further sanctions of increasing severity. We anticipate that the UK will seek to coordinate such sanctions with its international partners, including the EU and the US.