Sanctions (EU Exit) (Miscellaneous Amendments and Revocations) Regulations 2024

Lord Ahmad of Wimbledon Excerpts

Friday 24th May 2024 Lords Chamber

Moved by

[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.