The UK currently imposes sanctions based on EU laws, but that will change once the UK has left the EU. Post-Brexit, the UK will need a new autonomous framework for imposing and implementing sanctions. What that framework might look like has just become somewhat clearer, although much of the detail is still to be clarified.
On 2 August 2017, the Government published its response to the recent public consultation on this topic. The timing of publication of the response document is consistent with the Government’s intention (announced in the Queen’s Speech on 21 June 2017) to introduce a Sanctions Bill during the current Parliamentary session. Key points to note from the response document include the following:
- The Sanctions Bill will specify the main measures that may be included in a specific sanctions regime but will give the Government flexibility to suggest other measures when it creates a specific sanctions regime through secondary legislation;
- The Government intends to use the powers in the Sanctions Bill to align, ‘as appropriate’, UK sanctions designations with those of its international partners where this supports the UK’s security and foreign policy objectives;
- Each autonomous UK sanctions regime will be subject to review on an annual basis to assess whether it remains appropriate, with the Government having the further ability to conduct more frequent reviews in response to significant events (it is reasonable to suppose that, post-Brexit, EU and US sanctions regimes may not always be totally aligned and it will depend on the UK’s foreign policy objectives as to whether it aligns itself with EU or US laws (or neither) — obviously adding another layer of complexity for multinationals subject to the new UK sanctions as well as EU and US sanctions);
- Persons targeted by sanctions would be able to request an administrative reassessment of the Government’s decision at the time they are designated or re-designated, and designated persons would also be able to challenge their designation in the High Court by way of statutory procedures that involve judicial review principles (i.e. with the courts not being entitled to substitute their assessment of the policy reasons for designation of a person, as would be implicit in a full merits review);
- The licensing powers of the Office of Financial Sanctions Implementation (OFSI) will be broadened in some respects (e.g. a power enabling general licences to be introduced in some circumstances to authorise specific activities) and made stricter in others (e.g. to enable persons targeted by sanctions to pay for their basic needs, access justice, etc), with the overall aim of tailoring licence provisions to meet specific political, foreign policy or national security objectives;
- Specifically with a view to facilitating humanitarian aid to regions affected by sanctions, the Government intends to create a power enabling general licences to be introduced in certain circumstances to authorise specific activities;
- Controversially, the Government intends to expand the scope of reporting obligations with a broad range of businesses (not just financial services providers, as is currently the case) being required to report breaches of financial sanctions, including retrospective reporting on customers over the previous five years.
We are continuing to monitor developments.