On February 10, 2022, the UK government laid before parliament The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 (SI 2022/123). These regulations expanded the scope of the UK’s Russian sanctions regime. The new regulations have broadened the range of individuals, businesses and other entities that the UK can target, in the event of further Russian action against Ukraine.
The UK’s Foreign Secretary has stated that new sanctions legislation will enable the UK to “target more Russian interests that are of direct relevance to the Kremlin (…) so there would be nowhere to hide for Putin’s oligarchs or Russian companies involved in propping up the Russian state.”
The new regulations permitted the introduction of a new designation criterion, designed to target individuals and entities of significance to the Kremlin. The UK government is now entitled to designate an individual or entity that is or has been involved in “destabilizing Ukraine or threatening the territorial integrity, sovereignty or independence of Ukraine” or “obtaining a benefit from or supporting the Government of Russia“.
Pursuant to Regulation 6(4) of the new regulations, obtaining a benefit from or supporting the Government of Russia is defined broadly. It includes carrying on business as an affiliate of the Government of Russia; carrying on a business of economic significance to the Government of Russia; carrying on business in a sector of strategic significance to the Government of Russia; and owning or controlling directly or indirectly, or working as a director, trustee or equivalent of a Government of Russia-affiliated entity.
In sum, this extended remit of legislation allows the UK government to sanction not just those linked directly to the destabilization of Ukraine, but also Kremlin affiliated entities and businesses of strategic significance to the Russian government, as well as their owners, directors or trustees. It is worth noting that this expansion of powers will not designate or impose sanctions on any business or individual automatically.
No country has formally publicised a list of oligarchs that are considered targets of sanctions if Russia invades Ukraine. US and UK administrations have likely drafted a list of Russian businesspersons allied with Putin, which they intend to blacklist. However, they will not release these names unless required to do so, for diplomatic reasons, but also to prevent the targets from taking evasive actions. These individual restrictions would involve asset freezes, prohibitions on making funds or economic resources available, and travel bans against individuals close to President Putin.
When drawing up the list of names, the EU has indicated that it will, in principle, require a connection between the targeted individuals and the developments in Ukraine for them to be sanctioned, especially considering the potential for legal challenges. The UK has taken a different approach, siding with the US in stating that direct sanctions on Putin are not impossible. This is would be an unprecedented diplomatic statement, bringing sanctions against a leader of a member of the UN Security Council.
Only a trigger event may enable the expanded designation powers from the new regulations, but at this stage it is difficult to predict just how aggressive the UK government will be. However, with the new regulations the UK government have ensured that they have the capability to target a wider list of individuals and entities that are instrumental to the Kremlin in the event of further Russian hostility against Ukraine.