The House of Lords European Union Committee has published a report on UK-EU relations after Brexit which expresses concern about the “delay and uncertainty” surrounding the Government’s development of “detailed, workable proposals” for the framework for future UK – EU relations.
As regards sanctions, the report notes that the UK Government position and EU Council & Parliament are agreed that there should be cooperation on sanctions, including information exchange, but no agreement about the mechanism for delivering that outcome. It also notes the European Parliament’s position that “as a third country UK will not be able to participate in the EU’s decision-making”.
UK Foreign Secretary Boris Johnson, in response to a letter from the House of Commons Foreign Affairs Committee, has confirmed that after Brexit the UK will remain part of the JCPOA and continue to comply with it, and that the UK will:
- work closely with the EU to maintain Iran’s compliance and sanctions relief.
- carry over all existing EU sanctions regimes on Iran.
- “engage” at national and EU level to ensure that “business gets as much clarity and guidance as possible” on the EU blocking regulation.
- call on the US to “preserve the gains” the JCPOA has brought and to avoid actions “that would prevent the remaining parties from meeting their commitments to upholding the deal”.
The UN Security Council has added 2 Filipino nationals to its ISIL (Da’esh) and Al-Qaida sanctions list: Myrna Ajijul Mabanza (UN reasons for listing) and Abdulpatta Escalon Abubakar (UN reasons for listing). As a result, both individuals will be subject to asset freezes, travel bans and a prohibition to supply/sell them arms and related material. UN press release here.
The German government announced last week that it has set up an “Iran contact point” to advise companies on their business dealings with Iran, given President Trump’s recent decision to reimpose US sanctions on Iran. The government also stated that EU sanctions relief for Iran, one of the terms under the JCPOA, remained in place, and that government-backed export credit guarantees were still available.
The EU has extended for 1 year its sanctions in response to the illegal annexation of Crimea and Sevastopol by Russia until 23 June 2019, see Council Decision (CFSP) 2018/880. These sanctions (which apply to EU persons and EU based companies) are limited to the territory of Crimea and Sevastopol, and include:
(1) An import ban into the EU on goods from Crimea and Sevastopol;
(2) Restrictions on EU trade and investment related to certain economic sectors and infrastructure projects in Crimea and Sevastopol;
(3) A prohibition to supply tourism services in Crimea or Sevastopol; and
(4) An export ban for certain goods and technologies to Crimean companies or for use in Crimea in the transport, telecommunications and energy sectors and related to the prospection, exploration and production of oil, gas and mineral resources. Technical assistance, brokering, construction or engineering services related to infrastructure in these sectors must not be provided either. EU press release here.
As previously indicated, Brick Court Chambers is hosting an event this Thursday at 4.30pm at the Savoy Hotel (London) to explore the impact of Brexit on sanctions. Details here. Please send us questions for the panellists in advance to email@example.com so we can include as many as possible in the discussion. Please let us know if would still like to register for this event or can no longer attend.
Last week (15 June 2018), OFAC sanctioned 14 entities, pursuant to Executive Order (EO) 13818, for being affiliated with designated Israeli businessman and billionaire Dan Gertler (asset freezes imposed). EO 13818 targets corruption and serious human rights abuses (US Magnitsky law). Mr Gertler was designated under EO 13818 in December 2017, along with 19 companies and 1 associate for their ties to him (previous blog).
The US Treasury press release states that Mr Gertler is an “international businessman and billionaire who has amassed his fortune through hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals in the Democratic Republic of the Congo (DRC). Gertler has used his close friendship with DRC President Joseph Kabila to act as a middleman for mining asset sales in the DRC, requiring some multinational companies to go through Gertler to do business with the Congolese state. Gertler and his company Fleurette Properties have used offshore companies to facilitate such deals. As a result, between 2010 and 2012 alone, the DRC reportedly lost over $1.36 billion in revenues from the underpricing of mining assets that were sold to offshore companies linked to Gertler”. OFAC Notice here.
The Sanctions & Anti Money Laundering Act 2018 received royal assent on 23 May. It is the first substantive piece of Brexit-related legislation to have been enacted, and sets up a whole new framework for United Kingdom sanctions. It contains:
- New broad powers for the UK to make / suspend / revoke sanctions regimes, either to implement UN sanctions or for other purposes including the prevention of terrorism, international peace and security. The regimes may consist of a broad range of measures (targeted and sectoral) including shipping, trade and aircraft restrictions as well as financial sanctions and travel restrictions.
- New powers for the UK to add and remove people / entities / organisations from targeted sanctions lists (‘designations’) where there are ‘reasonable grounds to suspect’ involvement (of defined kinds) in certain specified activities. The ‘reasonable grounds to suspect’ threshold reflects the UK’s Government’s current standard when proposing designations to the EU or UN. The EU has no published standard for its listings, although the European court has required there to be a ‘sufficiently solid factual basis’. The new powers include the potential to list by ‘description’ where it isn’t possible to name someone.
- New ‘Magnitsky’ sanctions powers, to freeze and seize assets on grounds of gross human rights violations (an amendment made to the Bill in the aftermath of the Skripal poisoning).
- Due process requirements for designations including notifying designated people and entities, and automatic reviews of designations every 3 years (currently every year), and the need for proportionality. The Act requires designations to be ‘appropriate’, having regard to the purpose of the regulations, and ‘the likely significant effects of the designation on that person’.
- New wider UK licensing powers. At the moment the grounds on which the Office of Financial Sanctions Implementation (OFSI) may grant exceptions and licences to sanctions prohibitions in the UK are for the most part limited to the specific grounds set out in the relevant EU or UN regime. The Sanctions Act allows regulations that create exceptions to any prohibition, including general and specific licences, on far wider grounds (i.e. powers potentially more akin to US OFAC licences).
- New framework for UK court review. Certain sanctions decisions (including UK designations) will be subject to judicial review in the UK courts, with new rules of court to follow. Judicial review in the UK was previously limited because sanctions were imposed by the UN and EU rather than the UK. New court review will include closed material procedures in some cases, and damages for cases of negligent decisionmaking. Different remedies available for those listed on UN rather than EU lists (for legal reasons connected with the Kadi and Al Jedda cases).
- New UK terrorist asset freezing regime. The Act repeals the Terrorist Asset Freezing Act 2010, the current regime for terrorist asset freezing in the UK. This means the Act brings together terrorist asset freezing and other forms of sanctions into one piece of legislation. The Sanctions Act makes it easier to freeze terrorist assets (on a ‘reasonable grounds to suspect’ threshold as opposed to ‘reasonable belief’ plus ‘necessity’). There will still be an independent reviewer of terrorism designations (but not other sanctions designations).
- Powers to make UK regulations for enforcement and breach of sanctions, both civil and criminal, in relation to conduct in the UK or by UK nationals / incorporated bodies.
- Increased powers to require the provision and sharing of information and for search, entry and seizure. And obligations on the Government to issue guidance about prohibitions and requirements and the report on use of sanctions powers.
- New registers of beneficial ownership in overseas territories to be published by 2020.
See the most recent World Export Control Review for a longer piece by Maya Lester QC which explains the context of the Act and its immediate / future implications and effect.