On February 28, 2022, the UK government announced the designation of a further three Russian banks under the Russia (Sanctions) (EU Exit) Regulations 2019 (Russia Regulations) determined to be involved in obtaining a benefit from, or supporting, the Government of Russia.  Two of the three banks already were sanctioned by the United States.  Additional banks, including Sberbank, are expected to be targeted in the coming days.  The UK government also issued three general licenses for winding down some newly sanctioned business in the UK.

The three banks targeted are:

  • VEB.RF;
  • Bank Otkritie Financial Corporation PJSC; and
  • PJSC Sovcombank.

The UK measures, which took effect immediately upon their announcement, impose asset freezes and prohibitions on making funds or economic resources available to – or for the benefit of – designated persons.  The prohibition on dealing with the funds or economic resources of the designated persons also extends to any legal entities they own or control, directly or indirectly, even if the particular entity is not itself listed by the UK as a designated person.

The Chancellor of the Exchequer, in coordination with the Governor of the Bank of England, also announced the UK Government’s intention to impose further sanctions targeting the Central Bank of the Russian Federation (CBR).  This action will be taken in concert with the United States and the EU, to prevent the CBR from deploying its foreign reserves in ways that undermine the impact of sanctions imposed by the UK and its allies, and to undercut its ability to engage in foreign exchange transactions to support the Russian rouble.  HM Treasury has stated that the UK Government will “immediately take all necessary steps to bring into effect restrictions to prohibit any UK natural or legal persons from undertaking financial transactions involving the CBR, the Russian National Wealth Fund, and the Ministry of Finance of the Russian Federation.”  The UK government intends to make further related designations later this week.

Foreign Secretary Truss also announced in a statement to the UK parliament that the UK government will be laying two new pieces of sanctions legislation.  The first will introduce a set of new powers against Russia’s financial sector, including powers to prevent:

  • Russian banks from clearing payments in Sterling; and
  • the Russian state from raising debt in the UK.

As soon as this legislation is in force, Foreign Secretary Truss has stated that it will be applied to Sberbank.  She also announced the UK government’s intention to bring in a full asset freeze on all Russian banks within days in coordination with the UK’s allies.

The second piece of legislation will ban exports to Russia across a range of critical sectors, including high-end technological equipment such as microelectronics, marine, and navigation equipment.  The Department for International Trade and HM Treasury will offer advice and guidance to affected UK businesses regarding the impact of these new measures.

Further legislation is expected to follow in the coming weeks to sanction Russian-occupied territories in the Donbas, extend more sanctions to Belarus, and limit Russian deposits in UK banks.

In the early hours of March 1, 2022, the UK government issued three new general licences under Regulation 64 of the Russia Regulations, ahead of the anticipated laying of further Russia sanctions legislation in parliament later the same day:

  • INT/2022/1277777provides a wind down period in respect of sovereign debt, loans and money market instruments measures that will expire on March 8, 2022.
  • INT/2022/1277778 – provides a wind down period in respect of clearing and correspondent banking prohibitions that will expire on March 31, 2022. The licence permits UK credit or financial institutions to –
  • continue a correspondent banking relationship with Sberbank; and
  • process a sterling payment to, from or via Sberbank, a non-UK credit or financial institution that is owned or controlled directly or indirectly by Sberbank, or a UK credit or financial institution that is owned or controlled directly or indirectly by Sberbank.

Relevant Institutions also may process GBP payments made in accordance with the permissions above.

  • INT/2022/1277778 – adds additional days to INT/2022/1277778 to provide a wind down period until the June 24, 2022 in respect of clearing and correspondent banking prohibitions where the payments relate to making so-called “Relevant Energy Products” (e., crude oil, gas, and petroleum products as defined in the licence) available for use in the UK.

For information on the US sanctions announced between February 24 and 26, 2022, see this Steptoe blog post.

For information on EU sanctions announced on February 25, 2022, see this Steptoe blog post.

Visit this link to sign up to receive a recording of Steptoe’s recent webinar “Possible Sanctions Against Russia: What You Need to Know.”

For more information on how these developments could impact your organization, contact the author of this post, Alexandra Melia, in Steptoe’s Economic Sanctions team in London.