On December 14, 2023, a new UK Iran sanctions regime originally announced in July 2023 came into effect as The Iran (Sanctions) Regulations 2023 (“New Iran Regulations”) and The Iran (Human Rights) (EU Exit) Regulations 2019 (“Iran Human Rights Regulations”) were revoked. The new regime has been developed to respond to an escalation in threats from the Iranian regime, including efforts to undermine peace and security across the Middle East and plots against individuals on UK soil. The new regime also incorporates new trade sanctions targeting Iran’s drone programme that strengthen existing export restrictions on drone components and new powers to introduce transport sanctions on ships involved in contravening existing sanctions or that are owned or controlled by sanctioned individuals.
Expanded Purpose of the Regime
In addition to porting over the purposes and designation grounds of its predecessor, the Iran Human Rights Regulations, these powers under the New Iran Regulations have been expanded to include “to deter the Government of Iran or an armed group backed by the Government of Iran from conducting hostile activity against the United Kingdom or any other country.” For this purpose, an ‘armed group backed by the Government of Iran’ is defined to include any armed group that: (i) is being or has been armed, trained or funded by the Government of Iran; (ii) is taking or has taken direction from the Government of Iran; or (iii) is acting or has acted for the benefit of the Government of Iran.
‘Hostile activity’ is considered to be activity in which the Government of Iran, or an armed group backed by the Government of Iran, is involved in whatever way and wherever the involvement takes place and includes threatening, planning or conducting: (i) attacks against persons and assets in the UK or elsewhere; (ii) attacks against ships including the detention and sabotage of ships; (iii) activity which is intended to cause the destabilisation of the UK or any other country, as well as (iv) planning or conducting espionage for the Government of Iran; (v) carrying on business in the Iranian defence sector; (vi) owning or controlling a legal person in the Iranian defence sector; (vii) working as a director, trustee, or other manager or equivalent of a legal person in the Iranian defence sector; and (viii) holding the right to nominate at least one director, trustee or equivalent of a legal person in the Iranian defence sector. It also covers any conduct that facilitates, is intended to facilitate, or gives support/assistance to any of the foregoing activities, or being involved in assisting the contravention or circumvention of any relevant provision.
The UK government marked the New Iran Regulations coming into effect by using this new designation ground to sanction seven individuals and one entity affiliated with Hamas and Palestinian Islamic Jihad for their involvement in hostile activity with the intent of causing the destabilisation of Israel.
Director Disqualification Sanctions
The New Iran Regulations also introduce director disqualification sanctions, which prohibit a person designated on this basis (absent an available exception or licence) from acting as a director of a company, as well as directly or indirectly taking part, or being concerned, in the promotion, formation or management of a company.
Trade Sanctions on Unmanned Aerial Vehicles
The New Iran Regulations include new trade sanctions on the export, supply, delivery, making available, and transfer of unmanned aerial vehicle (“UAV”) goods and technology to, or for use in Iran, or to a person connected with Iran (i.e., an individual located, or ordinarily resident in, or an entity domiciled in, or incorporated under the law of, Iran). The provision of technical assistance, financial services, funds, and brokering services relating to UAV goods and technology also is subject to sanctions.
UAV goods and technology are defined in Schedule 4 of the New Iran Regulations as UAVs falling within commodity codes 8806 91, 8806 92, 8806 93, 8806 94, or 8806 99, as well as any: (i) propulsion and navigation items; (ii) electronic components and devices; or (iii) other items, listed in Parts 3 – 5 of Schedule 4.
There is an exception to these prohibitions where a person provides justification to the Secretary of State within five working days beginning on the day of the act that a particular act assisted with the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health or safety, infrastructure, or the environment.
Transport Sanctions on Ships
The New Iran Regulations introduce transport sanctions that prohibit access to UK ports by ships that are owned, controlled, chartered, or operated by a designated person for the purpose of this sanction, or that are ‘specified’ by the Secretary of State for Transport on the basis of reasonable grounds to suspect that the ship is used for any activity whose object or effect is to contravene or circumvent, or to enable or facilitate the contravention or circumvention of, any provision of the New Iran Regulations. These transport sanctions also permit port barring directions to be given in relation to specified ships.
Specified ships, as well as ships owned, controlled, chartered, or operated by a person designated for the purpose of these transport sanctions, also can be given port entry, movement, and detention directions, as well as having their registration in the register of British ships terminated. Ships also cannot be registered in the register of British ships if they are owned, controlled, or operated by a person designated for the purpose of these sanctions.
There is an exception to the prohibition on port entry if the entry is needed by the ship in a case of emergency.
Porting of Existing Designations Under the Iran Human Rights Regulations
OFSI has issued a financial sanctions notice to coincide with the launch of the New Iran Regulations, which states that 173 designations originally made under the Iran Human Rights Regulations have been transferred over to the New Iran Regulations. The notice also provides UK Sanctions List unique Id, and OFSI Consolidated List Group Id, references for the designations that have been transposed to the New Iran Regulations.
Implications for Business
The New Iran Regulations expand the scope of Iran-related UK sanctions. Companies impacted by this expansion in scope, particularly those involved in the manufacture of UAVs, related components and technology, and the operation of ports should consider the impact of these new restrictions and consider options to mitigate any associated sanctions compliance risks. For more information on these developments, contact the author of this post, Alexandra Melia, in Steptoe’s Economic Sanctions team in London.