Russia (Sanctions) (EU Exit) (Amendment) (No. 15) Regulations 2022

Anne-Marie Trevelyan Excerpts

Monday 14th November 2022 General Committees

[The Minister of State, Foreign, Commonwealth and Development Office (Anne-Marie Trevelyan)]

I beg to move,

That the Committee has considered the Russia (Sanctions) (EU Exit) (Amendment) (No. 15) Regulations 2022 (S.I. 2022, No. 1100).

The statutory instrument was laid before Parliament on 28 October under powers provided by the Sanctions and Anti-Money Laundering Act 2018, and makes amendments to the Russia (Sanctions) (EU Exit) Regulations 2019.

Let me say first that we have spotted a minor mistake in the drafting of the SI, owing to the unprecedented pace of our sanctions work. The export prohibitions on the products in new schedule 3I to the 2019 regulations, “Russia’s vulnerable goods”, will come into force on 1 January 2023, at the same time as the ban on the import of liquefied natural gas. We expect this to have minimal impact on the effectiveness of the measure, and we corrected documents associated with the SI to reflect this on 11 November.

In co-ordination with our allies, the United Kingdom has introduced the largest and most severe economic sanctions package that Russia has ever faced. Through these new measures, we will apply further pressure on Vladimir Putin and his regime. They will further isolate Russia’s economy and target key industries that support Putin, undermining his ability to fund his illegal war in Ukraine. The measures ban UK exports of hundreds of items that are critical to the functioning of Russia’s economy, particularly in the manufacturing sector, of critical importance to Russia’s industrial and technological capabilities. These items will be added to previously sanctioned goods to form an extended “Russia vulnerable goods” list.

This latest package applies to trade in previously unsanctioned goods worth £201 million in exports and £925 million in imports in 2021. The statutory instrument also bans additional imports from Russia, including gold jewellery, and Russian gold that has been processed in third countries, further strengthening the import ban on Russian gold that we introduced in July.

The SI prohibits imports of Russian liquefied natural gas from 1 January 2023, but it does not prohibit supply and delivery to third countries, in order not to impact their energy supply and security. The Government’s approach to energy sector-related sanctions is to increase the pressure on Russia’s economy by choking off a valuable source of income, while protecting other countries’ energy supply. We have reduced our imports of LNG, with only one shipment received, on 2 March.

The SI also bans the import of other specified goods that generate revenue for Russia, including vodka, vinegar, beverages and food waste products, and it prohibits the provision of services in technical assistance, financial services and expertise, and brokering sectors.

In total, the UK has wholly or partially sanctioned £20 billion, or 96%, of pre-invasion trade in goods. As with all our sanctions, this latest package has been developed in co-ordination with the UK’s international partners, and we will continue to work in concert with our allies to identify any potential gaps in our sanctions packages.

The UK remains resolute in our response. We will continue to stand with the people of Ukraine. The UK Government will not hesitate to bring forward further sanctions to target those who participate in, or facilitate, Putin’s illegal war of choice. I commend the regulations to the Committee.

--- Later in debate ---

[Anne-Marie Trevelyan]

I thank Committee members, and I thank the hon. Member for Hornsey and Wood Green for her insightful and generous support for what we are doing. I will do my best to answer her questions. If I miss any, I apologise; my team will write to her with any details that I miss.

The OFSI annual report was released just last week, and it shows the value of the assets frozen since the start of Putin’s illegal invasion: over £18 billion of Russian assets have been reported to OFSI as being held by or on behalf of persons designated under the Russia sanctions regime. That is a gargantuan increase from the £44 million of assets reported as frozen a year ago. I think we all agree that that underlines the scale and impact of our response in targeting Putin and his regime. We will continue to monitor how, if we need to, we can do more.

On the question of LNG prohibitions, the last shipment of Russian LNG came into the UK on 2 March, and since then UK companies have effectively been self-sanctioning. I am proud that we are the first European country to sanction LNG. We hope that others will follow as they feel they can. Other countries are in a more difficult, energy-dependent situation. We are very fortunate. British companies have been very robust and have taken a strong stance, which is to be commended.

I hope that the measures in the Economic Crime and Corporate Transparency Bill will address some of the concerns about Companies House. Companies House reform will bear down on the use of thousands of UK companies and other corporate structures to facilitate international money laundering, including, as the hon. Member for Hornsey and Wood Green mentioned, Russia-linked illicit finance and wider illegal activities.

[Brendan O’Hara (Argyll and Bute) (SNP)]

On money laundering, is the Minister aware that the BBC and Finance Uncovered recently revealed the use of English limited partnerships among Putin’s inner circle, and the fact that the oligarchs are almost undermining the sanctions regime by using them? Will she ask her officials what can be done to tighten up the loopholes in those partnerships? We guarantee cross-party support for the regulations, but we do have to tighten up these loopholes where they are identified.

[Anne-Marie Trevelyan]

The hon. Gentleman is right. Measures in the Bill will tackle the misuse of those limited partnerships. It will help to increase transparency and will force them off the register under specific conditions, but I take his challenge and we will continue to make sure that we are doing all we can. The Bill is a huge step forward and a key part of our wider Government approach to tackling economic crime.

The hon. Member for Hornsey and Wood Green is right that I would not dare to speak on behalf of His Majesty’s Treasury, but on the questions about OFSI and the staffing levels, the office has doubled in size in this financial year and will continue to grow to try to meet the challenges of the sanctions regime, the introduction of which we all support. The recruitment of new and permanent staff is continuing and we will keep a close eye on that. I know that the Treasury will too. There is a very clear focus on the human capital required to make sure that we can hold all of this in place.

On asset seizures specifically, we are considering all options for seizing Russia-linked assets that could be used to support the people of Ukraine, including to fund humanitarian efforts and contribute towards the reconstruction of the country, which will be a gargantuan effort. Law enforcement agencies can currently seize UK-based foreign assets with links to criminality or unlawful conduct through the Proceeds of Crime Act 2002. The FCDO is working closely with other Government Departments and law enforcement agencies to identify all possible options to seize Russia-linked assets in the UK that could be used to pay for reconstruction. We will continue to explore all possible options to seize Russia-linked assets to pay those reconstruction costs while respecting our legal obligations and responsibilities.

The question about Crown dependencies was important, because we all want to ensure that sanctions are implemented effectively in our Crown dependencies and overseas territories. UK sanctions regimes apply in all UK Crown dependencies and overseas territories either by Orders in Council or through each jurisdiction’s legislation. Orders in Council make the necessary changes to ensure effective implementation of the measures and the UK Government are working regularly with the governors and elected leaders to discuss implementation and the impact of those sanctions.

I hope that that helps to answer the questions I have been asked. If I have missed anything, I apologise, and I know that my team of officials will make sure that we provide the answers. I hope that these measures give confidence that we continue our wave of sanctions, because we are determined to ensure that Putin feels the damaging consequences of his choice to invade a democratic state illegally. We are committed to going further and we will continue to do so until Putin ends this war of aggression. I commend the regulations to the Committee.

Question put and agreed to.