UK’s latest sanctions against Russia – oil embargo, insurance, gold, coal and commercial services | perspective | Reed Smith LLP

UK oil ban

Observation

New Sanctions Russia (Sanctions) (EU Exit) (Amendment) (No. 14) Regulations 2022 (“The “UK 14th Amendment“) which amends the Russia (Sanctions) (EU Exit) Regulations 2019 (as amended, “UK Regulations, The UK’s 14th Amendment prohibits, among other things, (1) the import, acquisition and supply or distribution of Russian oil and oil products. in the UKand (2) the provision of technical, financial and brokerage support in respect of such products destined for uk,

The oil embargo comes into force on 31 December 2022 and, broadly speaking, brings the UK in line with Article 3M of Council Regulation (EU) 833/2014 (as amended, “EU regulations,

Impact on the UK insurance sector

The ban on providing financial services to oil and oil products has implications for the UK insurance sector, given that the definition of “financial services” includes the provision of insurance and reinsurance services (as defined in section 61(1)(a). ) as defined under the Sanctions and Anti-Money Laundering Act 2018).

As a result, from 31 December 2022, UK insurers will be prohibited from providing insurance services in connection with the import, acquisition and supply or distribution of listed oil and oil products, originating in or located in Russia, whose Destined for the UK.

Notably, however, the UK has no restrictions similar to Article 3n of the EU Regulations.

Exception

There are limited exceptions to the oil embargo, if the oil and oil products are cumulatively: (i) of non-Russian origin; (ii) is not owned by any person connected with Russia; and (iii) being loaded into, departing or transiting from Russia only.

In addition, the restrictions will not apply to products required for the purposes of a UK petroleum project, which means an oil or gas exploration or production project located wholly or partly in the United Kingdom or other specified areas.

Alignment with EU oil embargo

There are subtle differences between the restrictions of the two jurisdictions. For example, EU sanctions are limited to oil products under commodity codes 2709 00 (crude) and 2710 (other petroleum oils). Meanwhile, UK sanctions cover a much wider list, including products falling under commodity codes 2709 to 2715 (including petroleum gases and jellies), 2207 (ethyl alcohol) and 3826 (biodiesel oil).

Furthermore, while EU sanctions separate the wind-down period for CN code 2709 (crude oil, 5 December 2022) and CN code 2710 (certain petroleum oils, 5 February 2023), oil and oil under UK sanctions Extensive list of products is restricted from 31st December 2022 only. Accordingly, under UK regulations, all transactions caught by the new restrictions described above must be liquidated by 30 December 2022.

Other restrictions

G7 dependency and further inventory

With effect from 21 July 2022, there is a ban on the export, supply and distribution, and providing of goods (as well as related technical support, financial services and funding, and brokerage services), or for use in Russia, the list of goods referred to as “G7 reliance and known as “forward inventories”.

The list of goods, which the UK’s 14th Amendment introduces as the new Schedule 3E to UK Regulations, is comprehensive and includes chemicals, materials, machinery goods and electrical equipment. The goods have been targeted as goods of vital importance to the Russian economy and goods for which Russia particularly depends on the UK and G7 partners. This list closely mirrors the list of products prohibited under Article 3k listed under Annex XXIII of the EU Regulations.

An exception applies to certain diplomatic missions, consular posts and international organizations and their employees that are granted immunity under international law.

Sleep

From 21 July 2022, the UK has a ban on the import, acquisition and supply or delivery of gold originating from Russia. In addition, there are similar restrictions on the provision of related technical support, financial services, funds and brokerage services. On 21 July 2022, the European Union also imposed a ban on Russian gold under Regulation (EU) 2022/1269 (Article 3O), which is more comprehensive and also affects gold products restricted to third countries.

As with the G7 baggage, an exception applies to certain diplomatic missions, consular posts and organizations providing immunity.

Coal

From 10 August 2022 there is a ban on the import, acquisition and supply or distribution of coal and coal products in the UK. This is a coordinated sanction with the European Union, as the expiration period for the purchase, import or transfer of coal into the EU under existing contracts prior to 9 April 2022 under EU sanctions expires on 10 August 2022 ( See Article 3j(3 ) of the EU Regulations).

Amendments to energy-related goods and services

The UK’s 14th Amendment also expands existing restrictions on energy-related goods and technology.

These restrictions are effective immediately as amendments to existing restrictions.

Professional and Professional Services

With effect from 21 July 2022, there is a ban on the provision (directly or indirectly) of accounting, business and management consulting, and public relations services to persons connected with Russia (which broadly include Russian citizens and companies incorporated under the laws of Russia (including Russian affiliates of non-Russian entities)).

There are certain exemptions that may apply to UK individuals, for example services provided in the discharge or compliance with UK statutory or regulatory obligations.

Client Alert 2022-192

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