The UK’s Sanctions and Anti-Money Laundering Act Enters into Law
On 23 May 2018, the Sanctions and Anti-Money Laundering Act became law in the United Kingdom. Its aim is to provide a legal framework to allow the UK to impose sanctions and implement its own sanctions regime once the UK leaves the EU on 29 March 2019. However, the Bill goes well beyond any current EU sanctions regime and provides scope for the Government to shape an autonomous UK sanctions policy.
The Bill is widely applicable, specifying four types of sanctions for which regulations can be made. These are: financial sanctions, trade sanctions, immigration controls and sanctions against aircraft and maritime vessels. The key features of the Bill are as follows:
- Increases scope for the Government to impose sanctions. The Bill allows for sanctions to be imposed by the UK for “discretionary purposes”, including: furthering the prevention of terrorism, preserving international peace and security and any other measures that it considers “appropriate” to comply with its international obligations.
- Gives the Government the power to target individuals accused of “gross human rights violations” and seize their UK assets. This follows the US approach to sanctions, by introducing a system, which is comparable to the US Magnitsky list.
- Enables the Government to impose sanctions on individuals by description, where it is not practicable for an individual to be listed by name.
- Permits the Government to defer sanctions through exceptions and licensing. The intention is for the Government to be given greater flexibility and so it will be able to suspend or amend sanctions for a prescribed period of time.
- Grants temporary powers to amend the EU sanctions regime currently in place in the UK. Ministers will have this power for a period of two years following Brexit, however, no substantive amendments to the regime will be permitted.
- Widens the existing reporting requirements. This gives authorities wider discretion to request information. It also imposes a more stringent obligation on institutions to report. Regulated sectors, including financial institutions and lawyers, will continue to be subject to a higher reporting standard.
- Creates transparency with regards to ministers’ discretion under the Bill. The Government will be required to report regularly to Parliament on the use of the power to make sanctions regulations, identifying specifically regulations relating to gross human rights violations.
- Requires British Overseas Territories to publish public registers of beneficial ownership by the end of 2020.
Impact on Businesses
The Bill gives the UK the ability to shape a new sanctions landscape, expanding the scope of sanctions that will apply to all entities in the UK, whether or not they are foreign owned. Importantly, the bill applies to all entities within the UK, all UK entities overseas, the branches of UK entities overseas, and to all activities taking place within the UK. Current guidance suggests that these new regulations will also apply to all companies listed on UK stock exchanges regardless of whether they have actual operations in the UK.
Businesses will want to update their policies and procedures to ensure compliance with the Bill, but also address any discrepancies between the requirements of this bill as compared to U.S. and EU sanctions.