Ukraine Crisis: UK Announces Further Tranche of Sanctions Following Russian Invasion

On February 24, 2022, the UK government announced the designation of a further five individuals and six entities under the Russia (Sanctions) (EU Exit) Regulations 2019, following Russia’s invasion of Ukraine. The sanctions target companies and senior executives operating in Russia’s banking and defence sectors involved in the destabilization of Ukraine or in obtaining a benefit from, or supporting, the Government of Russia.  Three of the five individuals and three of the six companies already were sanctioned by the United States. The six companies targeted are:

• VTB Bank;
• JSC Research and Production Company Oralvagonzavod;
• PJSC United Aircraft Corporation;
• PJSC United Shipbuilding Corporation;
• State Corporation for the Promotion of the Development, Manufacture and Export of High Technology Products “Rostec”; and
• Tactical Missiles Corporation Joint Stock Company.

The five individuals targeted are:

• Denis Alexandrovich Bortnikov, Deputy President and Chairman of the Management Board of VTB Bank;
• Petr Mikhailovich Fradkov, Chairman/CEO of Promsvyazbank;
• Elena Alexandrovna Georgieva, Chairwoman of the Novikombank Board;
• Kirill Nikolaevich Shamalov, Deputy Chairman on the Management Board of PAO SIBUR Holding; and
• Yury Borisovich Slyusar, Director General of United Aircraft Corporation.

The UK measures, which took effect immediately upon their announcement, impose asset freezes and prohibitions on making funds or economic resources available to – or for the benefit of – designated persons.  The designated individuals also are subject to UK travel bans. The prohibition on dealing with the funds or economic resources of the 11 designated persons also extends to any legal entities they own or control, directly or indirectly, even if the particular entity is not itself listed by the UK as a designated person. Prime Minister Johnson also announced a broader package of sanctions measures to parliament.  While the details of the full package of measures has not yet been published, it will comprise:

• the imposition of financial sanctions on more than 100 new entities and individuals, including major manufacturers supporting the Russian military;
• new financial measures to target Russian finance, enabling the UK to totally exclude Russian banks from the UK financial system and stopping them from accessing Sterling and clearing payments through the UK;
• a ban on Russian state and private companies fund raising in the UK;
• the imposition of sanctions on Belarus for its role in the assault on Ukraine;
• banning Aeroflot from the UK;
• a limit on the amount of money that Russian nationals will be able to deposit in their UK bank accounts;
• the introduction of new trade restrictions and export controls in coordination with the US and EU; and
• the introduction early next week of new legislation to ban the export of all dual-use items to Russia, including a range of high-end and critical technological equipment and components in sectors including electronics, telecommunications, and aerospace.

Prime Minister Johnson indicated that the potential for cutting Russia out of SWIFT remained on the table, although it was currently unlikely due to the need to preserve unity in the response of international partners to the current situation.  His comments on the need to end “Europe’s collective dependence on Russian oil and gas” may also foreshadow a potential focus on the energy sector in subsequent rounds of sanctions. Prime Minister Johnson also announced a suite of other measures designed to tackle the flow of illicit Russian money into the UK, including measures on unexplained wealth orders, reforms to Companies House, a register of overseas property ownership, and the establishment of a new dedicated ‘Kleptocracy Cell’ in the National Crime Agency to target sanctions evasion and corrupt Russian assets hidden in the UK. For information on the US sanctions announced on February 23, 2022, see this Steptoe blog post. For information on EU sanctions announced on February 23, 2022, see this Steptoe blog post. Visit this link to sign up to receive a recording of Steptoe’s recent webinar “Possible Sanctions Against Russia: What You Need to Know.” 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.