Sanctions (EU Exit) (Miscellaneous Amendments and Revocations) Regulations 2024
(6 months ago)
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Lord Harlech
That the Regulations laid before the House on 15 May be approved.
Relevant document: Instrument not yet reported by the Joint Committee on Statutory Instruments.
Lord Harlech (Con)
My Lords, in recent years, the UK has transformed its use of sanctions. We have deployed sanctions in innovative and impactful ways, including in our response to Russia’s invasion of Ukraine. We take a rigorous approach, carefully targeted to deter and disrupt malign behaviour and to demonstrate our defence of international norms. This statutory instrument covers several measures which will strengthen our sanctions regimes across the board and allow us to continue the work already being implemented across government.
I will now turn to each measure within this SI in turn. In October 2023, the Government added a new type of sanction to the Sanctions and Anti-Money Laundering Act 2018, that of “director disqualification sanctions”. This instrument uses that new power to amend the UK’s autonomous sanctions regimes, which will mean the Government can apply it to individuals designated under these regimes. It will be an offence for a designated person subject to this new measure to act as a director of a company or take part in the management, formation or promotion of a company. This will further prevent those sanctioned from deriving benefit from the UK economy. It is an important addition to the UK’s sanctions toolkit.
This instrument provides Ministers with the flexibility to apply the new measure on a case-by-case basis. The Government will ensure that the measure is targeted and operates alongside the UK’s full suite of sanctions powers. It also enables the Government to issue licences to persons to allow them to undertake activity that is otherwise prohibited. The FCDO has been working closely with the Department for Business and Trade, Companies House and the Insolvency Service on the implementation of this measure.
The SI will also clarify the sanctions enforcement remit of His Majesty’s Revenue & Customs. HMRC has well-established responsibilities for enforcing trade sanctions in its capacity as the UK customs authority. In recent years, however, the scope of trade sanctions has evolved beyond import and export prohibitions, to include matters outside HMRC’s customs remit, such as sanctions on stand-alone services.
Last December, the Government announced the decision to establish the office of trade sanctions implementation—OTSI—within the Department for Business and Trade to enforce these new types of measures under civil law. Once it starts operating, OTSI will also be able to refer serious offences to HMRC for criminal enforcement consideration. HMRC will continue to have both civil and criminal enforcement responsibility for sanctions within its customs remit.
This legislation is needed to clarify the sanctions measures for which HMRC is solely responsible for enforcing and those which it will investigate on referral from OTSI or another civil enforcement organisation. It will establish a consistent approach to the enforcement of trade sanctions. It will facilitate HMRC and OTSI working in close partnership to robustly enforce all trade sanctions against Russia and other target countries using civil and criminal powers.
On the financial sanctions side, the SI includes new obligations for persons designated under the Belarus regime to report any assets they own, hold or control in the UK, or worldwide as a UK person, to the relevant authorities. The measure is another step in improving the transparency of assets owned, held or controlled in the UK by designated persons, and will strengthen the ability of His Majesty’s Treasury’s office of financial sanctions implementation to implement and enforce UK financial sanctions.
Importantly, the measure will act as a dual verification by enabling the comparison of disclosures by designated persons against existing reporting requirements which bite on firms such as financial institutions. Under the new requirement, the Government will be able to penalise those who make deliberate attempts to conceal assets to escape the effects of sanctions. An equivalent reporting obligation was placed on designated persons under the Russia regime in December 2023. Therefore, the extension of this requirement to Belarus also ensures alignment between the Russia and Belarus regimes, which is particularly vital given the frequent overlap of the Belarus and Russia sanctions regimes and the co-operation between the two states in relation to Russia’s invasion of Ukraine.
We have also included several sanctions on Belarus on the export of “battlefield goods”. These are goods such as electronic equipment and integrated circuits, as well as firearms and aerospace technology. These new measures also prohibit the import of Belarusian aluminium into the UK, both the metal itself and aluminium products. Aluminium products are a sector of strategic importance to Belarus and have been its top export to the UK. Although the UK nexus with the Belarusian economy is limited, the signalling impact of our sanctions on Belarus is and will remain important.
We keep sanctions under constant review and reserve the right to introduce further measures so that the Lukashenko regime continues to feel the consequences of its lack of respect for human rights and its support for Putin’s war.
Finally, we are also revoking the Burundi sanctions regime. This will remove an empty regime from the statute books. The decision in 2019 not to transpose into UK law designations under the original 2015 EU sanctions regime reflected the improved political situation in Burundi. We do not have the same level of concern about widespread political violence in Burundi that led to the original decision to impose this regime so have made no designations under it.
The Earl of Kinnoull (CB)
My Lords, I will speak briefly, but I certainly welcome the regulations. I want to reflect on a couple of things before asking the noble Lord to confirm something.
First, I will reflect on the cycle of sanctions. The cycle is that there needs to be a co-ordinated approach between various nations which are thinking of doing some sanctioning, and then after that there is the putting down of the sanction mechanisms. It is important to realise that it is very complicated to put these down, particularly when there are names of either people or legal entities using the letters of other alphabets—even the G7, which I will come on to in a moment, includes a country that uses an alphabet different from ours. Most importantly, then, is the monitoring for effectiveness, which in turn starts the cycle again, with a co-ordinated approach and the putting down of any changes, et cetera.
Secondly, the sanctions are effective with a co-ordinated approach. The European Affairs Committee, like the European Union Committee before it, has written very often about the importance of having a co-ordinated approach, particularly with the European Union. I am not going to rehearse the reasoning behind that because we have written about it in many reports that were debated in the House. It was always a unanimous decision of each committee that co-ordination is important.
Thirdly, and finally, I think that has been superseded by the importance of co-ordination with the G7. In February 2023, the G7 started up the G7 enforcement co-ordination mechanism. From a G7 point of view, with the its great command of the productive capacity and GDP of the world, it is extremely important that there is now a G7 method of making sure that sanctions work.
My question for the noble Lord is therefore this. Can he confirm that, as I think is the case, these regulations build on that international regulation by making us more flexible and more able to reflect an agreement to carry out sanctions on somebody or something?
Earl Attlee (Con)
My Lords, I am grateful for the careful way my noble friend explained the purpose of the regulations. He touched on aluminium exports from Belarus. As I understand it, Russia exports large amounts of aluminium—though I may be wrong. Have we stopped that? Are we able to stop those exports? If we did stop them, it might have a serious effect on the price of aluminium. It is worth remembering that aluminium and other raw materials such as steel are produced to international engineering standards, so they are homogeneous.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, it is a pleasure to follow the noble Earls, Lord Kinnoull and Lord Attlee. I am grateful to the noble Lord for introducing these amendments to the various sanctions regulations so comprehensively. As he outlined, the regulations introduce a new power to make it unlawful for a designated person to act as a director of a UK company. They also clarify the responsibilities of HMRC in relation to the enforcement of trade sanctions—a step we on these Benches welcome.
We also welcome the provisions relating to Belarus in the light of the country’s continued support for Russia’s illegal invasion of Ukraine. The extension of the prohibition on the import of aluminium to Belarus is significant, as noted in paragraph 5.16 of the Explanatory Memorandum. This is a key part of the economy, and it is vital that we extend the sanction.
Taken together, we hope that these measures will help to crack down on the circumvention of Russian sanctions—a topic that was discussed earlier this week during Questions to the noble Lord, Lord Cameron of Chipping Norton, the Foreign Secretary. The Minister will know that the Opposition have supported the Government in their approach to Russia-related sanctions. We are glad that the measure can be passed before Parliament is prorogued.
I ask for noble Lords’ indulgence for a moment, as this is my last contribution of this Parliament. I thank your Lordships’ House for being so welcoming to a new Member. I thank those on the Government Front Bench for their constructive approach to working together during my time on the Opposition Front Bench. I wish everyone a safe and fruitful general election campaign in the months ahead. I look forward to seeing all noble Lords in six weeks.
Lord Harlech (Con)
My Lords, I thank all noble Lords for their contributions. These measures are the latest addition to our continued work on sanctions. The scope of these measures shows the continuing work the UK does on sanctions, from strengthening our enforcement capacity, making it harder for entities to circumvent sanctions, to implementing new sanctions against those who continue to support Putin in his barbaric war against Ukraine, and keeping our regimes under review and lifting them when they no longer serve the purposes for which they were introduced.
I will now respond to the questions raised by noble Lords. The noble Earl, Lord Kinnoull, asked about global co-operation with our partners and allies, particularly the G7. We work closely with all our international partners, including the G7, and will continue to do so. Wherever possible, we take co-ordinated action with our partners to ensure the effectiveness of our sanctions. We will continue to do so on a range of circumvention issues, not only on outreach to third countries but to promote enhanced enforcement and the implementation of sanctions at home. We have regular quarterly meetings on sanctions with the EU, which promote co-operation and set forward strategies across all regimes. These meetings focus on all elements of sanctions policy, including the discussion of strategic sanctions and objectives, identifying areas of co-ordination and expertise sharing.
I thank the noble Baroness, Lady Anderson of Stoke-on-Trent, for her always thoughtful and incisive comments. It is always a pleasure to work with her, whether it is on FCDO, Defra or MoD briefs. I am grateful for her good wishes, and those of her colleagues the noble Lords, Lord Coaker and Lord Collins of Highbury, on the issue of Ukraine. I extend my thanks to all of His Majesty’s loyal Opposition for the collaborative and collegiate way in which we have shown that, as a country, we will not stand by and allow Putin’s barbaric and illegal invasion of Ukraine to go unpunished. We will lead in this country’s efforts to support the people of Ukraine.
As I said, we keep these sanctions—whether they be on individuals, corporate entities or countries—under review. The UK has transformed its use of sanctions. These measures show our commitment to continuing to strengthen our sanction regimes and their implementation and enforcement, and to review their ongoing appropriateness in changing foreign policy contexts. I once again thank Members for their insightful contributions and continued cross-party support for our sanction regimes.