Published on: 23 February 2022
With the world currently watching in horror at the escalating invasion of Ukraine by Russian forces, the UK has, as of the 22nd February, updated its list of Russian entities against which sanctions will be levied, with more updates expected. Today, we are asking our members how they are hoping to use the data in order to play their part in encouraging a peaceful resolution in the conflict, via a quick 2 minute survey. Please fill it out and share with your suppliers. Together we can help play our parts to keep the peace.
By filling out this quick anonymous survey you can help us find out how best we can support our members in doing their due diligence promptly. Prompt action through supply chain leverage COULD help de-escalate conflicts more quickly.
The legal nuts and bolts
The specific law is the Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018). Under this act sanctions regulations can be made to either:
- comply with a UN or other international regulation; or,
- achieve one of a number of defined “discretionary purposes” including preventing terrorism, promoting national and international peace and security, and responding to gross human rights violations.
Who needs to comply with financial sanctions?
Taken from the FAQ general guidance:
UK financial sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons, wherever they are in the world. This means that:
• All individuals and legal entities who are within or undertake activities within the UK’s territory must comply with UK financial sanctions that are in force.
• All UK nationals and legal entities established under UK law, including their branches, must also comply with UK financial sanctions that are in force irrespective of where their activities take place.
So that's all of us then..
Types of Sanction
There are four main types of sanctions that can be imposed under SAMLA 2018:
- Financial sanctions – to have an adverse financial impact on particular individuals or corporate entities;
- Immigration sanctions – preventing “excluded persons” for the purposes of the Immigration Act 1971, entering or remaining in the UK;
- Trade sanctions – disrupting various trade activities involving particular individuals, prescribed countries and/or specified ships, including in connection with goods, technology, land, military activities, and/or services (generally, or of a prescribed description);
- Aircraft and shipping sanctions – imposing prohibitions or requirements or authorising directions with respect to aircraft connected with particular individuals and/or prescribed countries & measures designed to do the same with respect to ships that are connected with particular individuals and/or prescribed countries, and/or that are specified ships.
Whilst conflict is often viewed through a military action lens, surprisingly it is through our supply chains that corporate entities can assess their exposure and also where they could possibly take action ahead of the implementation of formal sanctions. It is well known for example that Russia has significant control of oil and gas supplies and this influence plays a massive part in the way in which the rest of the world interact with Russia. It's also another reason to implement your climate action plan for Scope 2 suppliers..
What happens if we find we are in breach?
You can find full guidance on what to do if you suspect a breach of financial sanctions in the aptly named OFSI faq. However in summary the sooner you let OFSI know the better. "Regulations require individuals, entities and bodies to supply OFSI as soon as practicable with any information that would ‘facilitate compliance’ with the regulations. Any information provided will only be used for the purposes for which it was provided or received. This requirement applies to natural and legal persons, entities and bodies in the UK or under UK jurisdiction."
Don't our banks take care of all this? Do we have to worry about it?
We asked this question to trade.gov.uk who recommended that businesses check for themselves. Banks will also be doing their own checks of course, but will not be able to see into your supply chains. Consequently it makes sense to ask your suppliers what they are doing in order to prevent potential breaches as part of your own due diligence, if you are not doing so already.
For anyone wanting to know more about the general guidance for financial sanctions under SAMLA 2018 take a look at the OFSI FAQ on Financial Sanctions in the UK. There is specific OFSI guidance for organisations that are Importers or Exporters. Charities also have specific guidance as they also need to ensure that they are making necessary checks.
Please Help TISCreport Help Members Implement Effective Sanctions
By responding to our anonymous, 2-minute survey you will help us determine how we can be most useful to organisations wishing to prepare for taking their own sanctions action before formal actions are taken by UK Government. Please take some time and give us the steer we need to help bring peace to a highly volatile situation. This is yet another way in which supply chain transparency could be used to rapidly scale up impact. It is our duty to take it seriously.