UK announces the “largest and most severe package of economic sanctions that Russia has ever seen”

Broadly speaking and pending final details to be released by the UK Government and OFSI, the newly-announced sanctions cover a vast swathe of economic and trade activity and include:

• Imposing asset freezes on more than 100 new entities and individuals, including against Rostec as well as all the major manufacturers that support Putin’s “war machine”. This will also include a full asset freeze on “all Russian financial institutions” (including an immediate asset freeze against VTB Bank).
• Measures to strengthen significantly trade restrictions against Russia. This will include a prohibition against the export of a range of high-end and critical technical equipment and components in sectors including electronics, telecommunications, and aerospace.
• Measures to prevent Russian companies from issuing transferable securities and money market instruments in the UK.
• A power to prevent designated banks from accessing Sterling and clearing payments through the UK. Banks subject to this measure will be unable to process any payments through the UK or have access to UK financial markets.
• Banning Aeroflot from accessing UK airspace.
• New restrictions to cut off Russians’ access to UK banks including £50,000 limits on bank accounts.
• Bringing forward measures on Unexplained Wealth Orders in the Economic Crime Bill (to be introduced before the Easter recess), which will also include reforms to Companies House and the register of overseas property ownership.
• New sanctions against Belarus.

New Designations

In additional to this vast new economic and trade sanctions package, the UK Government has used its new powers under the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 (SI 2022/123), which strengthened its existing Russian sanctions legislation by extending its sanctions designation criteria to target Russian businesses and individuals in a wide range of strategically significant sectors (for further details on the scope of the UK’s updated sanctions designation criteria please see our client alert here), to designate five new Russian individuals and six new Russian entities (please see the OFSI Notice here).

As of today’s date, the following five individuals have been designated and are now subject to an immediate asset freeze:

• BORTNIKOV, Denis Alexandrovich
• FRADKOV, Petr Mikhailovich
• GEORGIEVA, Elena Alexandrovna
• SHAMALOV, Kirill Nikolaevich
• SLYUSAR, Yury Borisovich

In addition, the following six entities have also been designated and are also subject to an immediate asset freeze:

• JSC RESEARCH AND PRODUCTION CORPORATION URALVAGONZAVOD
• PUBLIC JOINT STOCK COMPANY “UNITED AIRCRAFT CORPORATION”
• PUBLIC JOINT STOCK COMPANY “UNITED SHIPBUILDING CORPORATION”
• STATE CORPORATION FOR THE PROMOTION OF THE DEVELOPMENT, MANUFACTURE AND EXPORT OF HIGH TECHNOLOGY PRODUCTS “ROSTEC”
• TACTICAL MISSILES CORPORATION JOINT STOCK COMPANY
• VTB BANK (PUBLIC JOINT-STOCK COMPANY)

Next steps

Legislation to implement the new economic and trade sanctions measures is expected to be introduced on Tuesday 1 March 2022. We will follow-up with a comprehensive summary of the new measures once further information is published by the UK Government and OFSI over the coming days and weeks.

In the meantime, Hogan Lovells is available to assist you in assessing your exposure and in ensuring compliance with UK sanctions measures in your transactions.

In the current, rapidly changing landscape, keeping on top of international sanctions regimes is more challenging than ever. Our comprehensive Sanctions Navigator collates sanctions regimes from the European Union, France, the United Kingdom, United Nations, and United States in one place, to help our clients answer any questions or address any sanctions-related issues they may have. Explore the Sanctions Navigator here.

Authored by Aline Doussin, Imogen Brooks, and Mez Azizi.