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UK Imposes Financial Sanctions on 22 individuals under the new Global Anti-Corruption Sanctions Regime

Posted on 6 May 2021

The UK announced on Monday 26 April that it was imposing asset freezes and travel bans against 22 individuals based in Russia, South Sudan and Latin America because of their suspected involvement in corruption.

Addressing international corruption and economic crime is high up the UK Government's agenda. On 30 March 2021 the Crown Prosecution Service introduced its first Economic Crime Strategy which sets out a high level policy statement of the CPS' plans for tackling economic crime over the next five years. The Global Anti-Corruption Sanctions Regulations 2021 add a further weapon in the armoury of this UK's anti-corruption agenda.

These sanctions were imposed using powers under the Global Anti-Corruption Sanctions Regulations 2021 which came into force the same day and it is reported that these are the first wave of sanctions under this legislation. Financial sanctions are increasingly being used as a foreign policy tool by individual countries, and now that the UK has its own autonomous sanctions regime it will have more freedom to pursue its anti-corruption agenda. This suggests more designations under the Global Anti-Corruption Sanctions Regulations 2021are likely to follow.

The Global Anti-Corruption Sanctions Regulations 2021

The Global Anti-Corruption Sanctions Regulations 2021 came into force on 26 April 2021 with the aim of allowing the UK to combat serious corruption, in particular bribery and misappropriation of public funds.

The legislation gives the Secretary of State the power to designate persons if he has reasonable grounds to suspect that the person is involved in serious corruption. Even those not directly involved in corruption can be caught by this legislation as individuals acting on behalf of a person who has been involved in serious corruption, or those who are associated with a person who is or has been involved in serious corruption may also find themselves on the sanctions list.

The effects of being designated under these regulations are widespread and impact not only the designated individual but also those who do business with that person.

For those who find themselves designated under the Global Anti-Corruption Sanctions Regulations they are likely to be excluded from entering the UK. Sanctions regimes are often mirrored across different jurisdictions so it is likely that once one country imposes a travel ban many others will follow, making it almost impossible for the designated person to travel in certain parts of the world. They are also likely to find themselves cut off from funds and, subject to certain exceptions, unable to use bank accounts in those jurisdictions.

For those who do business with a designated person the ramifications can be equally serious and wide ranging. For example, subject to certain exceptions, the asset freeze provisions prohibit anyone from dealing with funds or economic resources owned, held or controlled by the designated person. The regulations also prohibit making funds or economic resources available to the designated person. This can include funds in bank accounts or providing a loan. The consequences for failing to comply with these obligations are severe; it is a criminal offence to contravene the financial prohibitions set out in the regulations. It is also an offence to engage in activity that circumvents or enables or facilitates the contravention of any of the financial sanctions imposed under the regulations.

The obligation to comply with the financial sanctions imposed under these regulations (and therefore make them effective) rests firmly with parties who may have no connection to the underlying alleged corruption at all, for example banks or other financial institutions. The designation of 22 persons on the same day as the Global Anti-Corruption Sanctions Regulations 2021 came into force was no coincidence and is a clear sign that the UK is aggressively pursuing its anti-corruption agenda through criminal enforcement as well as sanctions. We have already seen a number of fines handed out by OFSI to banking institutions for breaches of financial sanctions and there is a clear message that the UK Government intends to make use of and enforce its autonomous sanctions regimes so we are likely to see significant activity is this area in the future.

The UK Government is clearly keen to make use of its autonomous sanctions regime, and is expanding the purposes for which it is able to impose financial sanctions. In light of this emphasis it is important that corporate entities ensure they have robust compliance procedures in place to ensure that they manage the risk. If breaches are identified it is important to seek specialist advice urgently. Equally, those who find themselves designated under any of the various UK regimes, which are often mirrored across Europe, the United States, and many other jurisdictions, need to ensure that they seek appropriate local advice, for example to identify precisely what is proscribed under the sanctions designation and, possibly more importantly, to know whether they can challenge the designation at a domestic level.

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