On 14 November 2024, the Sanctions (EU Exit) (Miscellaneous Amendments) (No.2) Regulations 2024 was laid in Parliament. This instrument introduces the following changes to sanctions legislation:
- An expansion of the definition of relevant firms subject to financial sanctions reporting obligations to cover additional sectors – high value dealers, art market participants, insolvency practitioners and letting agencies.
- Changing the existing requirements on relevant firms and involved persons to report suspected offences to a requirement to report suspected breaches of sanctions regulations.
- A requirement for all UK persons that hold funds or economic resources owned, held, or controlled by a designated person (DP), to provide an annual report to OFSI with the details of these assets.
- An amendment to the notification requirements on HM Treasury, the Department for Business and Trade (DBT), the Department for Transport (DFT), and the Insolvency Service when these persons issue, vary, suspend or revoke a specific sanctions licence.
- Legislative changes to the licensing and exceptions provisions in sanctions legislation. This includes an amendment to the pre-existing judicial decisions licensing purpose, the creation of a new insolvency licensing purpose and a new required payments exception. These changes do not apply in relation to UN regimes.
- New civil monetary penalty powers for breaches in relation to Russia land prohibitions.
- Updating the definition of designated person in Treasury licences schedules and exceptions provisions of sanctions regulations to confirm that this includes persons owned or controlled by named DPs.
- An amendment to certain asset freeze prohibitions to explicitly apply to persons owned or controlled by named DPs.
- An amendment to regulations 18C and 71 of the Russia regulations to clarify that acting as a nominee shareholder, when that involves the use of a trust or similar arrangement, should be considered a prohibited trust service.
- An amendment to the ‘Disclosure to the Treasury’ provisions in most financial sanctions regulations to clarify the scope of the Treasury’s functions in connection with sanctions.
- A modification to reporting requirements in relation to the assets of prohibited persons listed in regulation 18A of the Russia Regulations.
Taken together, these changes will collectively improve the ability of HM Treasury’s Office of Financial Sanctions Implementation (OFSI) to implement and enforce financial sanctions. The amendments will improve OFSI’s intelligence on industry’s compliance with UK financial sanctions, strengthen OFSI’s enforcement powers, enable OFSI to deal with licensing applications more efficiently, and will clarify financial sanctions legislation where there is existing uncertainty.
As of today (14 November 2024), OFSI updated its General, Russia, Libya, Reporting Information to OFSI, Enforcement & Monetary Penalties, and High Value Dealer and Art Market Participant guidance documents to reflect these changes to sanctions legislation.
OFSI has published new guidance in relation to Letting Agents and Insolvency Practitioners, and updated the High Value Dealer and Art Market Participant guidance, to provide further information on upcoming reporting obligations for these sectors.
All changes except for one (see below) will come into force on 5 December 2024.
The extension of reporting obligations to high value dealers, art market participants, letting agents and insolvency practitioners will come into force on 14 May 2025. OFSI intends to complete further industry engagement ahead of this measure taking effect.