The Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024

(6A) In paragraph (1), a “high value dealer” means a firm or sole trader that by way of business trades in goods (including an auctioneer dealing in goods), when the firm or sole trader makes or receives, in respect of any transaction, a payment or payments in cash of at least 10,000 euros in total, whether the transaction is executed in a single operation or in several operations which appear to be linked. (6B) In paragraph (1), an “art market participant” means, subject to paragraph (6C), a firm or sole practitioner that is registered or required to register with the Commissioners as an art market participant under regulation 56(5) and (6) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. (6C) A firm or sole practitioner is not an art market participant for the purposes of paragraph (6B) in relation to the sale or storage of a work of art which is created by, or is attributable to, a member of the firm or the sole practitioner. (6D) For the purposes of this regulation, “work of art” means anything which, in accordance with section 21(6) to (6B) of the Value Added Tax Act 1994 (value of imported goods), is a work of art for the purposes of section 21(5)(a) of that Act. (6E) In paragraph (1), an “insolvency practitioner” means a firm or individual who acts as an insolvency practitioner within the meaning of section 388 of the Insolvency Act 1986 or Article 3 of the Insolvency (Northern Ireland) Order 1989. (6F) In paragraph (1), “letting agency work” means work— (a) consisting of things done in response to instructions received from— (i) a person (a “prospective landlord”) seeking to find another person to whom to let land for a term of a month or more, or (ii) a person (a “prospective tenant”) seeking to find land to rent for a term of a month or more, and (b) done— (i) in relation to a prospective landlord, from the point that the prospective landlord instructs P, or (ii) otherwise in the course of concluding an agreement for the letting of land for a term of a month or more. (6G) For the purposes of paragraph (6F)— - “land” includes part of a building and part of any other structure. - “letting agency work” does not include the things listed in paragraph (6H) when done by, or by employees of, a firm or sole practitioner if neither the firm or sole practitioner, nor any of their employees, does anything else within paragraph (6F). (6H) Those things are— (a) publishing advertisements or disseminating information; (b) providing a means by which a prospective landlord or a prospective tenant can, in response to an advertisement or dissemination of information, make direct contact with a prospective tenant or a prospective landlord; (c) providing a means by which a prospective landlord and a prospective tenant can communicate directly with each other; (d) the provision of legal or notarial services by a barrister, advocate, solicitor or other legal representative communications with whom may be the subject of a claim to professional privilege or, in Scotland, protected from disclosure in legal proceedings on grounds of confidentiality of communications.

• (c) after paragraph (8)(d), insert—

(da) in the case of a relevant firm within paragraph (1)(k)— (i) in the course of trading, or acting as an intermediary in the sale or purchase of, works of art when the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more, or (ii) in the course of storing works of art where the value of the works of art so stored for a person amounts to 10,000 euros or more;

• (10) In regulation 100 (transitional provisions: prior obligations), in paragraph (4)(b), for “paragraphs 6(b)(i) and” substitute “paragraph”.

• (11) In Schedule 5 (Treasury licences: purposes)—

• (a) in paragraph 1 (interpretation)—

• (i) the existing text becomes sub-paragraph (1);

• (ii) in sub-paragraph (1), at the appropriate place insert—

• “frozen account” has the meaning given in regulation 55(7);

• (iii) after sub-paragraph (1) insert—

(2) For the purposes of this Schedule, references to a designated person are to be read as including a person (“C”) who is owned or controlled directly or indirectly (within the meaning of regulation 9) by the designated person (“P”). (3) When determining for the purposes of paragraph 10 when C became a designated person, C is to be treated as having become a designated person at the same time as P.

• (b) for paragraph 6 (pre-existing judicial decisions etc.) substitute—

(6) To enable the implementation or satisfaction (in whole or in part) of a judicial, administrative or arbitral decision or lien which is enforceable in the United Kingdom (the “judicial decision”), provided that— (a) where funds or economic resources are made available to a designated person, they are credited to a frozen account or otherwise frozen by virtue of regulation 15; (b) where funds or economic resources are made available by a person (including a designated person) to a designated person to enable the implementation or satisfaction of the judicial decision, no other designated person benefits, directly or indirectly.

• (c) after paragraph 12 (food) insert—

(13) (1) To enable anything to be done in connection with— (a) any insolvency and restructuring proceedings relating to an insolvent person, (b) any other relevant proceedings relating to a person other than an individual, or (c) proceedings under the insolvency law of a country other than the United Kingdom that correspond to the proceedings in paragraph (a) or (b), provided that any payments made directly or indirectly to a designated person are credited to a frozen account. (2) In this paragraph— - “enactment” has the meaning given in section 54(6) of the Act; - “insolvency and restructuring proceedings” includes— the regimes and proceedings set out in Parts A1 to 6 of the Insolvency Act 1986, Parts 1A to 7 of the Insolvency (Northern Ireland) Order 1989 and so much of Part 1 of that Order as applies for the purposes of those Parts, but excluding— proceedings under Chapter 3 of Part 4 (members’ voluntary winding up) of the Insolvency Act 1986, and proceedings under Chapter 3 of Part 5 (members’ voluntary winding up) of the Insolvency (Northern Ireland) Order 1989; arrangements and reconstructions under Part 26 of the Companies Act 2006; arrangements and reconstructions for companies in financial difficulty under Part 26A of the Companies Act 2006; the proceedings and arrangements set out in the Bankruptcy (Scotland) Act 2016; - “insolvent person” means a person (“P”), other than an individual, where— P is unable to pay its debts as they fall due, or the value of P’s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities; - “other relevant proceedings” means— the regimes and proceedings set out in— sections 367 and 377A to 377J of, or Schedule 19C to, the Financial Services and Markets Act 2000; the Insurers (Reorganisation and Winding Up) (Lloyd’s) Regulations 2005; Parts 1 to 3 of the Banking Act 2009 (including Parts 2 and 3 as applied to building societies by section 90C of the Building Societies Act 1986); the Investment Bank Special Administration Regulations 2011; Part 6 of the Financial Services (Banking Reform) Act 2013; the Payment and Electronic Money Institution Insolvency Regulations 2021; Schedule 11 to the Financial Services and Markets Act 2023; proceedings under any other special administration regime; - “special administration regime” means provision made by an enactment for an insolvency procedure that— is similar or corresponds to the ordinary administration procedure provided for by Schedule B1 to the Insolvency Act 1986 or Schedule B1 to the Insolvency (Northern Ireland) Order 1989, and provides for the administrator to have one or more special objectives instead of or in addition to the objectives of ordinary administration.

Amendment of the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024

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• (1) The Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024⁷⁸ are amended as follows.

• (2) In regulation 2 (interpretation), in the definition of “excluded trade sanctions regulations”, in paragraph (a), before sub-paragraph (i) insert—

1. regulation 18(1) (investments in relation to non-government controlled Ukrainian territory), in so far as it concerns an activity mentioned in regulation 18(2)(a);
2. regulation 18B(1) (investments in relation to Russia), in so far as it concerns an activity mentioned in regulation 18B(2)(a) or (b);

Signed

Stephen Doughty — Minister of State — Foreign, Commonwealth and Development Office — 12th November 2024

Explanatory note

(This note is not part of the Regulations)

Explanatory Note

These Regulations are made under the Sanctions and Anti-Money Laundering Act 2018 (c. 13). They make miscellaneous amendments to most of the existing sanctions regulations.

They clarify that the prohibitions on the making available of funds or economic resources to any person for the benefit of a designated person extend to legal persons owned or controlled by that designated person (see, for example, regulation 2(2) and (3); see also regulation 9(2) and (3) for the counter-terrorism context).

They amend provisions relating to the notification requirements for licensing, to provide that written notice must be given to the licence applicant when a licence which authorises acts by a particular person is issued, varied, revoked or suspended (see, for example, regulation 2(6)).

They make a minor amendment to the duty on relevant firms to report a breach of certain sanctions. This makes clear that the duty is not simply to report a suspected offence but a suspected breach of sanctions or licensing requirements (see, for example, regulation (2)(7)(a)).

They require persons to provide annual reporting to the Treasury on funds or economic resources that they know or have reasonable cause to suspect they hold for a designated person (see, for example, regulation 2(7)(b)).

They add four types of firm to the list of “relevant firms” who are subject to relevant reporting obligations: high value dealers, art market participants, insolvency practitioners and letting agents (see, for example, regulation 2(9)).

They clarify for the purposes of the licensing of financial sanctions’ prohibitions and relevant exceptions for financial sanctions that a designated person includes a person who is owned or controlled by them (see, for example, regulation 2(4) and 2(12)(a)).

They make a minor clarification to the power given to public authorities to share information with the Treasury, to link this to the relevant sanctions regulations (see, for example, regulation 2(10).

For non-UN designated persons, they add a new exception for the purposes of financial sanctions to allow certain payments a designated person is required to make to certain authorities such as the Financial Conduct Authority and the Commissioners for HM Revenue and Customs (see, for example, regulation 2(5)); and an associated reporting obligation (regulation 2(8)). In the case of the Russia (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/855) (“the Russia Regulations”), they introduce an equivalent exception in relation to the prohibition on processing certain payments in regulation 17A of those Regulations (see regulation 15(7)).

For non-UN designated persons, the Regulations also change the scope of the licensing purposes, to enable the Treasury to license a wider class of case related to the implementation of judicial decisions (see regulation 2(12)(b)); and to introduce a bespoke purpose to enable licensing for certain insolvency positions (see regulation 2(12)(c)).

The Regulations amend the Democratic People’s Republic of Korea (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/411) to move the existing land prohibitions from Part 4 (Finance) to Part 6 (Trade) (see regulation 3(4) to (6)). The competent enforcement authorities for those prohibitions in that regime are the Department for Business and Trade (civil) and His Majesty’s Revenue and Customs (criminal).

The Regulations make some additional amendments to the Russia Regulations.

They clarify for the purposes of the trust services prohibition in regulation 18C of the Russia Regulations that acting as a nominee shareholder where that involves a trust or similar arrangement is to be considered a prohibited trust service (see regulation 15(4)).

They make minor amendments to clarify the reporting requirements that apply to the funds or economic resources of persons to whom financial services must not be provided by virtue of regulation 18A of the Russia Regulations (see regulation 15(10)(b)).

They create new civil monetary penalty powers for the Treasury in respect of prohibitions in the Russia Regulations relating to land located in non-government controlled Ukrainian territory or in Russia (see regulation 15(15))

The Regulations also amend the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 (S.I. 2024/948) to include land prohibitions contained within the Russia Regulations in the definition of “excluded trade sanctions regulations”. These will be enforced by the Treasury.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sectors is foreseen.

Footnotes