Sanctions Implementation and Enforcement

Baroness Chapman of Darlington Excerpts

Thursday 15th May 2025 Lords Chamber

[The Minister of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)]

My Lords, with the leave of the House, I shall now repeat a Statement made in another place. The Statement is as follows:

“With permission, Madam Deputy Speaker, I will make a Statement on the cross-government review of sanctions implementation and enforcement. I promised to update the House on this issue at the earliest opportunity, and I am glad to have the chance to do so today. For those Members who want to get into the full details, they are being published on GOV.UK.

Sanctions are a powerful tool in our armoury and a vital foreign policy and national security tool. They are used to deter and disrupt threats and malign behaviour and demonstrate our values. Our sanctions support UK interests, protect our citizens and defend international peace and security.

Maximising economic pressure on Russia is key to securing a just and lasting peace in Ukraine, as we debated in the House yesterday. As I said then, the UK has sanctioned over 2,400 targets under our Russia regime and international sanctions have deprived Putin of $450 billion since the invasion began, an amount of money that would have allowed him to prosecute his terrible war for many more years.

Since July 2024, this Government have introduced more than 500 new sanctions designations against individuals, entities and ships. Just last Friday, the Prime Minister announced a major package of sanctions to target the decrepit and dangerous shadow fleet carrying Russian oil. This is the largest package of sanctions against the shadow fleet, with 110 targets. According to some estimates, sanctions have crippled 200 ships—almost half of Putin’s entire fleet.

President Zelensky is serious about peace, agreeing in principle to a full, unconditional and immediate ceasefire. His readiness for that peace is demonstrated by his being in Turkey. Meanwhile, Putin has dodged and delayed, all the while raining down terror on Ukraine. If Putin does not engage seriously on peace, the UK and our allies will have no choice but to ramp up this economic pressure even further, forcing him to the table.

Alongside taking measures against Russia, we are using designations to uphold human rights and promote democracy around the world. Just last month, we targeted pro-Kremlin operatives responsible for destabilising Moldova and we sanctioned corrupt officials in Georgia and Guatemala for undermining democracy and the rule of law. But we will not stop there. We will continue to expose malign activity wherever we find it, using the full range of sanctions tools at our disposal to shape the world for the better.

Sanctions play a crucial role in the Foreign Secretary’s mission to tackle corruption and dirty money, which is vital to protect the UK from criminals and safeguard our democracy. In January, the Foreign Secretary announced our new, world-first legislation to use sanctions to crack down on those fuelling irregular migration.

This Government are committed not only to using sanctions effectively but—this is the main focus of the Statement—to ensuring that they are enforced rigorously. This means punishing serious breaches with large fines or criminal prosecutions. In opposition, we recognised that there was a need for greater focus on sanctions enforcement. Since Labour came to office, we have been working across government on this, as well as liaising with law enforcement partners and industry. In October, we launched the Office of Trade Sanctions Implementation, with new civil enforcement powers to crack down on those seeking to soften the blow of our sanctions. At the same time, we introduced civil powers for the Department for Transport to enforce transport sanctions.

We have reinforced the Office of Financial Sanctions Implementation in His Majesty’s Treasury—known as OFSI for short—and the multi-agency Joint Maritime Security Centre, enabling them to better tackle evasion and develop new tools targeting the Russian shadow fleet, including in the English Channel. The investments and improvements we have made are already paying off. Last month, OFSI imposed a penalty of £465,000 on a major law firm’s subsidiary for breaches of sanctions linked to Russia’s invasion of Ukraine. We also saw the UK’s first successful prosecution under the Russia financial sanctions regulations, thanks to the excellent work by the National Crime Agency. I commend it and its teams for the incredible work they have done. I expect to see more enforcement action in the coming year. I obviously cannot go into the details of that in the House, but we should be assured that our teams are working effectively in a range of agencies and across government.

Funding from the Economic Deterrence Initiative has been critical to strengthening our capabilities and maintaining the UK’s reputation among its allies. This initiative is bolstering sanctions work in the overseas territories and Crown dependencies; for example, in the British Virgin Islands, it has enabled the NCA to support enforcement and combat potential circumvention. Excellent work has been going on in that regard, and we hosted OTs and CDs at Lancaster House just a few months ago, to collaborate and ensure that we are improving capability across those territories.

I turn to the enforcement review. I am determined to go after those who try to evade our sanctions. In October, I launched a cross-ministerial review to look at how we can improve UK sanctions implementation and enforcement. A strong sanctions regime is crucial for achieving our foreign policy goals and, in turn, building a secure and prosperous UK. This forward-leaning review had three goals: first, to make it easier to comply with our sanctions, which will help businesses to support us in our shared goals; secondly, to increase the deterrent effect of enforcement and make it clear that avoiding sanctions does not pay; and, thirdly, to enhance our ability to take robust action against those seeking to evade our measures. We are publishing the report on the conclusions today, and I am glad of this opportunity to set out how we will ensure that the UK’s approach continues to set a gold standard.

We know that the vast majority of businesses agree with our sanctions and are keen to work with us to make sure that they are enforced. To simplify compliance, we have launched a new email alert system to keep UK businesses updated on designations, legislation, licences and other related topics. We are making our guidance clearer and easier to access, providing further clarity to UK industry on ownership and control and introducing a single sanctions list for all designated persons. We will also assess the benefits of creating a single reporting point for suspected breaches. To give our sanctions extra bite and deter evasion, we will publish a new enforcement strategy, making clear the consequences of non-compliance. We will look at new options to accelerate civil penalties for financial sanctions breaches, including via an early settlement scheme. We are dedicated to strengthening our enforcement tools and ensuring that we have the necessary powers, capabilities and intelligence.

We have already taken action. Last month, we introduced measures to prevent designated individuals from holding director roles in the UK, protecting our brilliant British businesses. The Department for Business and Trade is updating laws to protect workers who report breaches of financial, transport and certain trade sanctions, giving them crucial whistleblower protections. Those actions, taken together and at pace, will further improve our world-class sanctions regime, allowing the UK to project strength and promote the rule of law across the world.

But we are not satisfied with just those measures. We are committed to exploring other areas, so that we can go even further and deeper to improve enforcement. A number of those areas will take longer to scope, and I will be able to update the House on them in due course. We will explore options for more effective join-up on intelligence, including the merits of a new joint sanctions intelligence function. We will consider the introduction of sanctions end-use licensing controls for exports with a high risk of sanctions diversion.

We will continue to support the British Overseas Territories and Crown dependencies in enhancing their enforcement capabilities and will explore enhancing transport powers to target specific aircraft with sectoral sanctions. As appropriate, we will update Parliament when additional outcomes have been scoped, including those that require new or amended legislation. We have brought forward a number of pieces of sanctions legislation recently; in addition, we expanded our Russia regime this week into a range of areas and varied our Syria regime in the light of changed circumstances there.

Let me conclude by reiterating the Government’s commitment to strengthening the implementation and enforcement of UK sanctions. As we deliver the actions set out in the review, we will continue to engage across departments and with industry, wider stakeholders and international partners to maximise the effectiveness of our work. I commend this Statement to the House”.

--- Later in debate ---

[Lord Purvis of Tweed (LD)]

My Lords, I am impressed by the Minister’s efficiency. She replied positively to me on Monday when I asked for an opportunity to have a wider discussion on sanctions enforcement; I did not quite appreciate that she would deliver that three days later. It is very impressive indeed.

I have had the opportunity of debating every sanction that the previous Administration and this one have put in place since the establishment of the post-Brexit regime. These Benches have supported them at each step, but we have made the case that the sanctions tool should be used more impactfully, especially on occasions where we do not believe the sanctions go far enough, such as on the repressive actions of the Georgian regime, as referenced in the Statement, and individuals within it. On Israel and Gaza, we have repeatedly called for a widening of sanctions against those within the Netanyahu Administration, who are inflicting and facilitating the infliction of a great humanitarian crisis in Gaza and the West Bank.

I made it my mission to see the Wagner Group proscribed and was very grateful when the previous Government did it. However, our sanctions should be chasing after Russia and, for any organisation sanctioned or proscribed by the UK, there will have to be continued action.

Overall, we welcome the Statement and the review, which I had the opportunity to look at online. Fundamentally, I think it found that there was nothing wrong, but there were a number of areas where it wanted to go ahead. There was a curious line saying that the fundamental principle was

“to secure international agreement across all 193 UN Member States”

for sanctions. That is rather impossible when we are sanctioning quite a chunk of them. There was also a wee bit of Whitehall verbiage: we are to expect an invigorated toolkit of

“capabilities, capacity, powers, and actionable intelligence to take robust enforcement”

and

“user-friendly guidance to a new enforcement strategy”.

I look forward to them. No doubt we will debate what that means when we get them.

We are promised an early settlement scheme. This is an area that has raised a slight alarm signal with me. How will this interact with what the review has said about the need to increase deterrence? It is not necessary to have deterrence if we have an early settlement scheme for those who are breaching financial sanctions. If not today, perhaps the Minister might be able to say more at a later date.

The Minister referred to the £465,000 penalty for Herbert Smith Freehills for making funds available for the benefit of a designated person without a licence. This is welcome, but it is only one of five penalties since 2023, with a total amount of just £485,000. Without that £465,000, there have been only £20,000 of penalties. Is this a lack of enforcement or a stunning level of adherence to the UK sanctions regimes?

I had the opportunity to look at the excellent OFSI threat assessment report, which goes into a little more detail about some of the context. I have a couple of questions, one of them linked to the point raised by the noble Lord, Lord Callanan.

We have a number of frozen assets within the UK. On Monday, we discussed new rounds of Syria sanctions. We have £157 million in frozen Syrian assets. Given what the Minister said on Monday and what President Trump has been saying about the new Syrian President, can the Minister write to me on the status of that amount, identifying the ultimate legal beneficial owner of the frozen assets? If it is the former Assad regime, or those linked to it, then presumably we should not be offering them back. Why have we not seized those assets, which can be used for the benefit of the Syrian people, who desperately need it?

On the Russian assets, we now have, as reported by OFSI, £25 billion. We on these Benches would like to see a draft Bill on what would be required under UK law to seize those assets. We do not need to wait on others, either in the G7 or elsewhere, or act at their slow pace. These assets have been frozen under UK legislation and the power to seize them will be under UK legislation, so if there need to be any changes to UK legislation, we should see what the context is, because obviously these Benches believe that Putin should not be rewarded by getting money back at the end of this process.

The threat assessment report also highlighted what it said was a growing number of enablers and enabling countries. It singled out some, including, at the highest level of growth, the UAE. What diplomatic tools are we using for those countries which we know are the source of enablers who circumvent UK financial sanctions? As OFSI said, that is growing.

The threat assessment report also says that there are almost certainly enablers using crypto assets to breach UK financial sanctions. Can the Minister write to me on the estimated scale of this? Have we the same approach to co-ordination with our allies to ensure that this is the case, given the very dubious means by which President Trump is using crypto assets, and the difficulty in understanding the source of the crypto assets?

On China, we believe our sanctions should go further with regard to those in the Chinese Government who restrict the rights of people in Hong Kong and, in particular, those here in the United Kingdom who are operating transnational repression. It is utterly unacceptable, and I will be pursuing this further in this Chamber.

Many of us had the great privilege today of meeting former President Tsai Ing-wen, when welcoming her to Parliament. She is the highest-level official of the Taiwanese Government—both current and previous Governments—who has ever visited the UK Parliament. I pay credit to the noble Baroness, Lady D’Souza, and others who have worked so hard and tirelessly over a number of years. The former President’s lecture to us was an inspiration, because it was about democrats fighting against repression, building up resilience and ensuring that they have support here in the United Kingdom. Our sanctions regime should help people such as her, with her great leadership, and it was a real privilege to have her in Parliament today.

[Baroness Chapman of Darlington (Lab)]

My Lords, I thank the noble Lord, Lord Purvis—yes, this Government like to deliver promptly. I similarly did not anticipate being back here discussing this Statement quite so soon, not least because I had it down at 6 pm in my diary, so I ran very fast in heels from the department.

I welcome the fact that noble Lords have encouraged us to go further, and I note the comments that were made on different sanctions, including on China and others. Obviously, we do not comment on future designations—we have rehearsed that line many times in this Chamber—but we do listen when noble Lords make these kinds of observations and encourage the Government. We take these things on board and listen to what is said, but we obviously do not comment ahead of time.

I take the point made by the noble Lord, Lord Purvis, on verbiage; that is entirely fair. We try our best with these things. I believe that what the report is saying is clear, but we should be open to improving specific language where we can.

I understand the point on early settlement. All I will say is that it is just an additional tool: sometimes it is appropriate, sometimes it is not. It is important that we use it only when it is the right thing to do, when it has the effect that we want and it is not a less impactful option. I understand the concern—it is legitimate to raise it—but it is important to have that as another way of tackling this issue.

We continue to look at the Syrian and Russian frozen assets. There is an issue around frozen assets, as we have explained many times. There are legal concerns as well as potential consequences for British assets in other parts of the world. We hear the argument, and we will continue to look at this.

On the point about enablers, we have regular and detailed engagement with partner countries, where appropriate. This is an important point, and the Government are mindful of making sure that we use our levers to address it.

I thank the noble Lord, Lord Callanan, for his welcome of this report, and I completely agree with every word he said about Putin, Ukraine and Russia. I am happy to acknowledge the work that the previous Government did on this. We are building on that, as he would want us to do.

I do not have anything new to say on the Chelsea Football Club issue; I wish I did. I wish we could get this resolved and get the money where it needs to be. We are continuing to work on this at every level, and I hope that we will be able to come back to the House with a different answer very soon.

The noble Lord, Lord Callanan, was absolutely right about communication with business and making sure that the rules and updates are as widely known as possible. Measures are suggested in the report that we will implement, including email alerts, and we will continue to work through the DBT and take other opportunities to make sure that that happens.

The noble Lord asked whether we will leverage our influence. The answer to that is absolutely yes. Generally, this work is ongoing. This is not something where you ever complete the task and say, “We’ve done all the work we’re ever going to do on sanctions, and we’ve got it completely right”. We are in competition with criminal gangs and with different ways of working, so we need to keep this evolving. We need to keep it under review, keep challenging ourselves and keep changing and innovating. I am grateful to the parties opposite for their support for that work.

[Lord Northbrook (Con)]

My Lords, I congratulate the Minister on the cross-government review and on adding a little bit extra to the Statement, which was most welcome. I have a couple of queries. I welcome both the Government’s and the Opposition’s actions on this. First, one problem with Russia is that it is able to evade sanctions by exporting oil through India and doing trade with China. I wonder if I could have the Minister’s comments on that. Secondly, I welcome the sanctions actions on the overseas territories, which, I hope, are generally well regulated. I wonder if the Minister could say a bit more about the BVI, which seem to be a slight exception to this?

[Baroness Chapman of Darlington (Lab)]

Yes, we discuss our concerns with all partner countries—where we have them—on Russian oil. On the OTs and BVI, we are working very closely with them on trying to make sure they have what they need to enable them to do the job we want them to do. I think we are getting there, and we speak to them very regularly. We are hopeful. The Minister for the Overseas Territories meets with them very regularly. He is deeply concerned about this. We had long discussions with them earlier this year, and we will keep the House updated if we need to.

[Lord Deben (Con)]

I wonder whether I could refer to yesterday’s implementation of the additional sanction arrangements on letting agents and the like. This is very welcome, because there is no doubt that there has been a very considerable use of housing and the like as a means of establishing funds in this country by people who should not be doing that.

I am concerned about whether the Government can do more to help the letting agents and others explain this to the people who are not really affected, but who have to give all sorts of information which they would not have had to give before. It is very important to overcome the natural irritation which, for example, we have now when you want a bank account and difficulties arise. Because of this, I hope there can be discussions between the Government and the real estate industry across the board as to the form of words that could be used, so that when people are faced with this additional burden, they can say to themselves, “I am doing something useful. I am doing something because of what is happening in Ukraine”, and make it into a positive action. I have just read the documents that have gone out from letting agencies, and I fear that it just looks like another burden on people’s shoulders. I want to make this a success. Can we get the language right, and can we use it as a positive mechanism?

[Baroness Chapman of Darlington (Lab)]

That is a really interesting question. I had not thought about that, but I will speak to colleagues at MHCLG to see if we can do something along the lines the noble Lord describes, because compliance is enhanced when people understand why they are being asked to do things. It is a really interesting comment, and we need to work very closely across government on this.

[The Earl of Effingham (Con)]

My Lords, I quote David Lammy, who correctly said that we have to act quickly, and that

“I believe we should move from freezing assets to seizing assets”.—[Official Report, Commons, 25/2/25; col. 626.]

That was in February of this year. The noble Lord, Lord Purvis of Tweed, correctly asked, “What are we doing to start using these assets”? We have £25 billion. The Minister said that we are continuing to look at this. I appreciate that, clearly, we have to respect the law, but that is a lot of assets and a considerable amount of time has already passed since David Lammy made those comments. Are the best legal minds—and we have many of those in this country—looking at this? What are the real barriers? Surely, that would help the Ukrainians, who need the funding.

[Baroness Chapman of Darlington (Lab)]

I do not think the noble Earl will find any disagreement on this side of the House. I take his encouragement to move at a faster pace.

[Viscount Chandos (Lab)]

I add my thanks and support for the Statement that my noble friend the Minister made, and raise a specific issue about this prospective use of frozen assets, whether the assets themselves or the income derived from them. A massive reconstruction challenge faces us in Ukraine, but there is also the important issue of sustainable media. I declare my interest as chair of the Thomson Foundation. I was privileged to be at the launch of the FCDO media freedom exhibition presided over by my right honourable friend the Foreign Secretary. I just put in a plea that some part of the assets and the income from them be added to the modest but invaluable budget that there is to support media freedom.

[Baroness Chapman of Darlington (Lab)]

I hear my noble friend, who also wants us to move on frozen assets. It is something on which we all agree. Along with our partners, we have managed to release the $50 billion in the ERA, but I completely hear that noble Lords want us to do more.

[Lord Bruce of Bennachie (LD)]

My Lords, I very much welcome what the Minister said and I am glad that we have cross-party support for this. I wonder whether I could inject a question relating to some of the comments that have been made by the American Administration about the possibility of easing sanctions against Russia, which President Trump has said on more than one occasion. Can I seek clarification and assurance from the Minister that our sanctions regime is under our control and subject to Parliament’s approval or disapproval for any change?

[Baroness Chapman of Darlington (Lab)]

Our sanctions regime is the UK’s and we make our decisions in accordance with our laws. Although we do not comment on future designations or lifting designations, I have no reason to think that it is the UK Government’s intention or that we have any plans, until there is peace between Ukraine and Russia, and Putin withdraws his troops—as he could today—and stops this illegal war, to change our general approach to the use of sanctions on Russia.

House adjourned at 5.42 pm.