UK adopts new sanctions regime targeting individuals involved in serious corruption

On 26 April 2021, the UK government brought into force a new sanctions regime, designed to target individuals involved in serious corruption and prevent them from entering the UK or using the UK financial system. To date, 22 individuals have been designated. The new regime marks the latest development in the UK's post-Brexit shift to a 'mid-Atlantic' sanctions strategy, with the focus of coordination shifting from the EU to the US.

The Global Anti-Corruption Sanctions Regulations

The Global Anti-Corruption Sanctions Regulations 2021 (the "Regulations") enable the UK government to designate persons where there are reasonable grounds to suspect that they are, or have been, involved in "serious corruption", which covers bribery involving foreign public officials and misappropriation of property by foreign public officials. 'Involvement' in serious corruption extends more broadly than conduct that would constitute an offence under the UK's Bribery Act 2010. It can apply to persons who facilitate, profit from, conceal, or launder the proceeds of serious corruption, and to persons who fail (deliberately or recklessly) to fulfil their responsibility to investigate or prosecute such corruption, or who interfere in proceedings relating to such corruption.

As with other UK sanctions regimes, designated persons can be subject to a travel ban – preventing them from entering or residing in the UK – and / or an asset freeze. An asset freeze prohibits dealing with any funds or economic resources owned, held or controlled by the designated person, or making funds or economic resources available (directly or indirectly) to or for the benefit of the designated person. These prohibitions apply within the UK's territory and to conduct by UK persons – including UK-established legal entities and British nationals – in the UK or overseas.

The designated individuals

The 22 individuals designated under the regime to date¹ comprise:

• Fourteen Russian nationals, including public officials, accused of the misappropriation of USD 230 million of Russian state assets via a fraudulent tax scheme uncovered by the lawyer Sergei Magnitsky, who died in prison in Moscow in 2009;
• The three Gupta brothers and their associate, accused of serious corruption in relation to South African politicians; 
• A Sudanese businessman, said to be an enabler of corruption and violence in relation to funds from South Sudan; and
• Three Latin American public officials, accused of serious corruption in Guatemala, Nicaragua and Honduras.

None of these individuals were previously designated under UK sanctions regimes.

Continued development of the UK's sanctions strategy post-Brexit

The Regulations had been anticipated, following the March 2021 publication of the UK government's Integrated Review of Security, Defence, Development and Foreign Policy (the "Review"), which set out the government's security and foreign policy objectives to 2025.² The Review emphasised that autonomous sanctions would form a key part of the UK's plan to achieve these objectives, and stated that the UK would build on its first autonomous sanctions regime – the Global Human Rights Sanctions Regulations 2020 – by implementing the Regulations during 2021.

The Review also noted that Brexit allowed the UK to be faster and more agile in its use of sanctions, while continuing to coordinate closely with allies who have similar regimes in order to maximise the impact of sanctions. This is the approach taken in the Regulations, building on the model of the Global Human Rights Sanctions Regulations. As noted in the Review, the US and Canada have implemented similar anti-corruption and human rights sanctions regimes, and 13 of the 22 individuals designated under the Regulations have previously been designated by the US. US Secretary of State Antony Blinken stated that the Regulations "[complement] ongoing U.S. initiatives, enhancing our ability to cooperate and coordinate on comparable human rights and corruption sanctions programs, such as the U.S. Global Magnitsky sanctions program".³ This coordination is likely to continue; the UK government's guidance on the Regulations notes that the government is "likely to give particular consideration to cases where international partners have adopted, or propose to adopt, sanctions and where action by the UK is likely to increase the effect of the designation in addressing the corruption in question."⁴

In contrast, the EU has not yet implemented an anti-corruption sanctions regime, having only introduced a human rights sanctions regime in December 2020.⁵ None of the 22 individuals designated under the new UK Regulations are currently included on the EU's consolidated financial sanctions list. However, the EU has already come under pressure to follow the US and UK's lead: on 29 April 2021, the European Parliament adopted a non-binding resolution calling for the EU to impose new anti-corruption sanctions on Russians suspected of fraud and corruption.⁶

Looking forward

The EU may choose to close this gap and align with the US and UK approach, but its delay in doing so, and the UK's choice to coordinate with the US rather than the EU, highlight the shift in the UK's post-Brexit sanctions strategy. The UK has not entirely broken with the EU on sanctions – for example, it has largely retained the EU's Blocking Regulation prohibiting compliance with US sanctions against Iran. However, the UK's overall direction of travel appears to be towards a 'mid-Atlantic' sanctions strategy, reflecting the UK's broader coordination with the US on anti-corruption and anti-financial crime measures.

The development of a distinct UK sanctions strategy makes sanctions compliance more complex for multinational businesses established or operating in the UK. The overlap between the UK and US / EU regimes is often not exact, and compliance with US and EU sanctions will not automatically ensure compliance with UK sanctions. As the UK's sanctions strategy continues to mature, businesses are likely to find themselves shouldering a greater compliance burden.

See also: 

_{1 A full list of names can be found at The UK sanctions list.
2 Global Britain in a competitive age  
3 On the United Kingdom’s Establishment of a Global Anti-Corruption Sanctions Regime
4 Global anti-corruption sanctions: guidance
5 EU marks Human Rights Day with new global human rights sanctions regime
6 EU should impose anti-corruption sanctions on Russians, lawmakers say}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2021 White & Case LLP}