UK announces first sanctions targeting Russian banks and oligarchs after Russia enters Ukraine’s Donetsk and Luhansk regions

On February 22, 2022, British Prime Minister Boris Johnson announcement designation of five Russian banks and three high net worth individuals under the recently expanded program Russia (Sanctions) (Leaving EU) Regulations 2019 (see our previous blog post on the UK’s expanded sanctioning powers here). This announcement follows the recognition by the Russian government of the so-called Donetsk People’s Republic (DNR) and the Luhansk People’s Republic (LNR) and the placement of Russian military forces in these territories for alleged peacekeeping operations. the peace.

The sanctions target Russian banks and wealthy individuals involved in destabilizing Ukraine or gaining advantage or support from the Russian government. The three individuals and four of the five banks (except PJSC Promsvyazbank) have already been sanctioned by the United States.

The UK measures, which came into force immediately after their announcement, impose asset freezes and prohibitions on making funds or economic resources available to – or for the benefit of – designated persons. The named individuals are also subject to UK travel bans.

The five targeted Russian banks are:

  • Rossia Bank;
  • Black Sea Bank for Development and Reconstruction;
  • JSC Genbank;
  • IS Bank; and
  • PJSC Promsviazbank.

The three people involved are:

  • Gennadiy Timchenko;
  • Boris Rotenberg; and
  • Igor Rotenberg.

The prohibition on dealing with the funds or economic resources of the Eight Designated Persons also extends to all legal entities that they own or control, directly or indirectly, even if the particular entity is not itself listed. by the United Kingdom as a designated person.

The test for “ownership or control” in this context is whether (1) the designated person owns, directly or indirectly, 50% or more of the entity’s shares or voting rights or has the right to appoint or remove a majority of the entity’s board of directors, or (2) it is reasonable to expect that the designated person will be able to ensure that the affairs of the entity are conducted in accordance with his or her wishes.

The UK measures apply to all persons within the territory and territorial sea of ​​the United Kingdom and to all British persons wherever they are in the world. This means that all:

  • natural and legal persons who are or carry out activities on British territory must comply with the new measures imposed; and
  • UK nationals and legal persons established under UK law, including their branches, must also comply with the measures, regardless of where they do business.

Announcing the measures, Prime Minister Johnson said today’s sanctions were “the first installment, the first barrage, of what [the UK is] ready to do so: we will have other sanctions ready to deploy alongside the United States and the European Union if the situation escalates further.

In one Press release Issued after today’s announcement of sanctions measures, British Foreign Secretary Liz Truss stressed that this first wave of sanctions was intended to “hit oligarchs and banks close to the Kremlin.” This sends a clear message that the UK will use our economic clout to inflict pain on Russia and degrade its strategic interests. Foreign Secretary Truss also underlined the UK’s willingness “to go much further if Russia does not pull itself out of the abyss. . . reduce[ing] the ability of the Russian state and Russian companies to raise funds [UK] markets, ban[ing] a range of high-tech exports, and further isolate[ing] Russian banks in the world economy.

Foreign Secretary Truss’ press release went on to say that the UK would also:

  • sanction members of the Russian Duma and Federation Council who voted in favor of recognizing the independence of the so-called DNR and LNR;
  • extending territorial sanctions imposed on Crimea to non-government controlled territories in the so-called DNRs and LNRs over the next few weeks, barring UK individuals and businesses from dealing with these territories until they are handed over under Ukrainian control; and
  • implement a wide range of sanctions measures aimed at the Russian financial sector and trade in the event of further aggressive acts by Russia against Ukraine. As part of this package, the UK will soon introduce legislation to prevent Russia from issuing sovereign debt in UK markets if Russia does not defuse.

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