Overview
On July 21, 2022, further amendments to the UK’s Russia sanctions regime were laid before parliament. The new measures introduced under the Russia (Sanctions) (EU Exit) (Amendment) (No. 14) Regulations 2022 (“Amendment 14”) include the coal, oil and gold import bans and ban on the provision of professional and business services previously announced by the UK government. Amendment 14 also introduces trade restrictions targeting a significant number of new “G7 dependency and further” goods and expands existing restrictions with respect to energy-related goods and services.
Ban on Coal and Coal Products
Amendment 14 prohibits certain activities in relation to coal and coal products. For the purpose of these prohibitions, coal and coal products are defined in Schedule 3H of the Russia (Sanctions) (EU Exit) Regulations 2019, as amended (“Russia Regulations”) by commodity codes 2701 – 2708.
In particular, the ban prohibits on or after August 10, 2022, the:
- Import of coal and coal products that are consigned from, or originate in, Russia;
- Direct or indirect acquisition of coal and coal products that originate, or are located, in Russia with the intention of those goods entering the United Kingdom;
- Direct or indirect supply or delivery of coal and coal products from a place in Russia to the United Kingdom; and
- Direct or indirect provision of technical assistance, financial services, funds or brokering services in relation to such products.
Ban on Oil and Oil Products
Amendment 14 introduces a ban that will take effect on December 31, 2022, on the:
- Import of oil and oil products, which are consigned from, or originate in, Russia;
- Direct or indirect acquisition of oil and oil products that originate, or are located, in Russia with the intention of those goods entering the United Kingdom;
- Direct or indirect supply or delivery of oil and oil products from a place in Russia to the United Kingdom; and
- Direct or indirect provision of technical assistance, financial services, funds or brokering services in relation to such products.
Oil and oil products are defined in Part 2, Schedule 3F of the Russia Regulations, by reference to their commodity codes.
An exception to these prohibitions also has been created that applies to any relevant activity in relation to oil and oil products that:
- Originate in a country that is not Russia;
- Are not owned by a person connected with Russia; and
- Are only being loaded in, departing from or transiting through Russia.
Ban on Gold
A ban on certain activities relating to gold has been introduced by Amendment 14, which takes effect from July 21, 2022. For the purpose of these prohibitions, gold is defined in Schedule 3G of the Russia Regulations as gold coin, waste and scrap gold, and gold in unwrought, semi-manufactured or powder form by reference to the commodity codes 7108, 71129 10000 and ex 7118 9000.
In particular, the ban prohibits the:
- Import of gold originating from Russia, when the gold has been exported from Russia on or after July 21, 2022. For the purpose of this prohibition, gold is considered to have been exported from Russia when it has completed the applicable export formalities and it has either left Russian territory (in the case of land transportation) or departed a port or airport in Russia for a destination outside Russia (in the case of transport by sea or air);
- Direct or indirect acquisition of gold that originated, or is located, in Russia with the intention of those goods entering the United Kingdom;
- Direct or indirect supply or delivery of gold originating in Russia from a place in Russia or from a country other than the United Kingdom, Isle of Man or Russia, to the United Kingdom; and
- Direct or indirect provision of technical assistance, financial services, funds or brokering services in relation to such products.
Ban on the Provision of Professional and Business Services
Amendment 14 introduces a new ban on the direct or indirect provision of accounting, business and management consulting or public relations services to a person connected with Russia (i.e., an individual ordinarily resident, or located, in Russia or a legal person incorporated under the law of, or domiciled in, Russia).
For the purpose of this prohibition, the pertinent services are defined as follows:
- Accounting services are framed broadly as –
- accounting review services (i.e., services involving the review by a person of annual and interim financial statements and other accounting information, but excluding auditing services);
- compilation of financial statements services (i.e., services involving the compilation by a person of financial statements from information provided by a client, including preparation services of business tax returns when provided together with the preparation of financial statements for a single fee, but excluding such preparation services of business tax returns when provided as a separate service);
- other accounting services such as attestations, valuations, preparation services of pro forma statements; and
- bookkeeping services (i.e., services consisting of classifying and recording business transactions in terms of money or some unit of measurement in the books of account, but excluding bookkeeping services related to tax returns).
- Business and management consulting services means advisory, guidance and operational assistance services provided for business policy and strategy and the overall planning, structuring and control of an organisation, which includes (but is not limited to) management auditing, market management, human resources, production management and project management consulting.
- Public relations services means services provided by a person related to improving the image of their clients and their relationship with the general public and other institutions, but excludes planning and creating services for advertising or public opinion polling services.
An exception to this prohibition also has been created that applies to an act undertaken by a person in satisfaction of an obligation:
- In respect of the provision of professional and business services to a person connected with Russia when the particular services are provided in relation to the discharge of, or compliance with, UK statutory or regulatory obligations, such obligations not arising under contract;
- Arising under a contract concluded before July 20, 2022, or an ancillary contract necessary for the satisfaction of such a contract, provided that the act is carried out before August 21, 2022, and the provider of professional services has notified the Secretary of State no later than the day 10 working days before the day on which the act is carried out; or
- That is necessary for the official purposes of a diplomatic mission or consular post in Russia, or of an international organisation enjoying immunities in accordance with international law.
Introduction of New Trade Sanctions Targeting G7 Dependency and Further Goods
Amendment 14 introduces a new prohibition on the export, supply, delivery or making available of G7 dependency and further goods to, for use in, Russia, or to a person connected with Russia. G7 dependency and further goods are defined in Schedule 3E of the Russia Regulations and cover a wide range of hundreds of key industrial inputs. Amendment 14 also includes prohibitions on providing technical assistance, financial services, funds and brokering services in relation to such goods.
Expansion of Trade Restrictions on Energy-Related Goods and Services
Amendment 14 expands the restrictions on energy-related goods to include:
- The export of energy-related goods to Russia;
- The direct or indirect supply or delivery of energy-related goods from a country that is not the United Kingdom, Isle of Man or Russia to a place in Russia;
- The direct or indirect making available of energy-related goods to a person connected with Russia; and
- The broadening of the restrictions on providing related financial services, funds and brokering services to reflect the foregoing amendments.
Amendment 14 also has widened the prohibition on the provision of energy-related services to catch drilling, well testing, logging and completion services or the supply of specialized floating vessels necessary for an oil or gas exploration or production project in Russia as a whole.
Amendment 14 has created two exceptions to these prohibitions. First, an exception to the prohibitions on energy-related goods and related activities for any relevant activity that is necessary for the purpose of an oil or gas exploration or production project that is wholly or partially located:
- Within the United Kingdom;
- Within waters adjacent to the United Kingdom (up to the seaward limits of the territorial sea, or the seabed and subsoil below them); or
- Within areas from time to time designated under section 1(7) of the Continental Shelf Act 1964(4) and any waters within the limits of such areas.
Second, an exception to the prohibitions on providing financial and brokering services relating to energy-related goods also has been created that applies to the provision of insurance or reinsurance to a person that is not connected with Russia with regard to that person’s activities outside the energy sector in Russia.
