Uncertainty surrounding scope of Russian sanctions

Uncertainty surrounding scope of Russian sanctions

In October 2023, the Court of Appeal shared its opinion on the sanctions affecting UK businesses dealing with Russia. They discussed whether a subsidiary of the Russian Central Bank (CBR), which is not directly sanctioned, could still be subject to UK sanctions.

This opinion stemmed from a financial dispute involving Russian financial institutions, including the CBR subsidiary. These institutions were trying to recover funds lost due to an alleged fraud case.

Key points from the Court's opinion

  • The Court suggested that the CBR and its subsidiary might be considered 'controlled' by Vladimir Putin and Elvira Nabiullina, who are designated under UK sanctions.
  • This opinion isn't legally binding but holds persuasive weight and could impact UK companies dealing with Russian partners linked to the Russian state.

What could this opinion mean for you?

  • The uncertainty created by this opinion might lead the UK government to amend sanctions regulations for clarification.
  • If your business deals with Russian partners connected to the Russian state, you should consider whether they might be sanctioned due to their connection to designated individuals.
  • Similar issues might arise in other countries with sanctions regulations when powerful political figures influence economic actors. Consider revising your approach to sanctions risk management.

Our Financial Service Partner, John Pauley commented:

This controversial opinion illustrates the issues that many smaller businesses face in trying to avoid inadvertently dealing with sanctioned entities. Sanctions rules are not always easy to navigate so calling on expert advice can really help keep your business on the right side of the law.

If you have concerns about this development or other aspects of managing exposure to the UK financial sanctions regime, our experienced solicitors are here to help. Please contact our team for further information and support.

About our expert

John Pauley

John Pauley

Financial Services Partner
John is a specialist solicitor with extensive expertise in financial services regulation. He advises financial institutions, services providers, and merchants on regulated activities including payments, e-money, consumer credit, data protection, anti-money laundering, and gambling operations.

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