On September 30, 2022, the UK Foreign Secretary, James Cleverly, announced new services and goods export bans targeting vulnerable sectors of the Russian economy in response to President Putin’s announcement of the annexation of the Ukrainian regions of Donetsk, Luhansk, Kherson and Zaporizhzhia following sham referendums. The imposition of an asset freeze also was announced on the Governor of the Central Bank of the Russian Federation (CBR), alongside measures to suspend the process by which actions taken to manage the orderly failure of Russian banks are recognized under the laws of the United Kingdom. The announcements were made in tandem with the UK’s international partners.
For more information on how these developments could impact your organization, contact the author of this post, Alexandra Melia, in Steptoe’s Economic Sanctions team in London.
Expansion of Services Ban
According to the Foreign, Commonwealth and Development Office press release, Russia imports 67% of its services from sanctioning countries. Building on previous measures to ban the provision of certain professional and business consulting services to persons connected with Russia, the UK has announced an expansion of the services ban to target Russian access to:
- IT consultancy services (e.g., designing IT systems and software applications);
- architectural services;
- engineering services;
- advertising services;
- transactional legal advisory services (e.g., certain commercial and transactional services); and
- auditing services.
Taken as a whole, the expansion of the services prohibitions that has been announced is intended to erode Russia’s ability to maintain technological development with the rest of the world, debilitate the future growth of Russia’s key industries, and hamper the ability of Russia’s businesses to operate internationally and keep pace in the international market.
The precise scope of the expanded services ban is not yet clear, as the legislation implementing these measures has not yet been laid before parliament. We will provide a further update once the proposals are published.
New Export Ban on Certain Goods
The Foreign Secretary also has announced a new ban on the export of almost 700 goods from the United Kingdom to Russia. While the list of affected goods has not yet been released, it is reported to include hundreds of goods that are critical for production in Russia’s manufacturing sector.
Alongside the export measures announced on September 30, the UK continues to work with the G7 to finalize and implement the proposed price cap on Russian oil.
Asset Freeze Imposed on Governor of the Central Bank of the Russian Federation
HM Treasury’s Office of Financial Sanctions Implementation (OFSI) today announced the designation of Elvira Nabiullina, the Governor of the CBR. According to a Foreign, Commonwealth and Development Office press release, Ms. Nabiullina “has been instrumental in steering the Russian economy through the Russian regime’s illegal war against Ukraine and extending the ruble into the Ukrainian territories that are temporarily controlled by Russia.” Following her designation, Ms. Nabiullina is now subject to an asset freeze and UK travel ban.
It has been made clear that the UK Government does not consider that Ms. Nabiullina owns or controls the CBR and, consequently, the CBR is not de facto subject to a UK asset freeze following Ms. Nabiullina’s designation.
Recognition of Actions To Manage the Orderly Failure of Sanctioned Russian Banks
Finally, the Foreign Secretary has announced that the United Kingdom will suspend the process by which actions taken to manage the orderly failure of Russian banks are recognized under UK laws in cases where the bank in question is a sanctioned entity. The purpose of this measure is to prevent those Russian actions from taking legal effect in the UK and potentially providing economic benefit to the Russian state.
