In a LinkedIn posting today (29 December 2020), the Gambling Commission has drawn attention to changes to the UK’s financial sanctions framework that will come into effect at 11pm UK time (i.e. 12.00 midnight CET) on 31 December 2020, stating:
From 11:00pm on 31 December 2020, there will be changes to the UK’s financial sanctions framework. From that date, the UK will no longer apply EU sanctions regulations and all sanctions regimes will be implemented through UK regulations.
Gambling operators’ attention is drawn to OFSI’s blog article Get ready for the end of the transition period, which provides information on the changes which will come into effect from 1 January 2021
The Commission provides a link to an blog (entitled “Get ready for the end of the transition period”) posted by OFSI on 1 December 2020. You can download it below, but it reads as follows:
Get ready for the end of the transition period
From 11:00pm on 31 December 2020, there will be changes to the UK’s sanctions framework. After the transition period ends, the UK will no longer apply EU sanctions regulations and all sanctions regimes will be implemented through UK regulations.
This blog explains:
- what you need to know about these changes
- what we have already implemented, and
- what you need to do now
The Sanctions and Anti-Money Laundering Act 2018 (the Sanctions Act) provides the legal framework for the UK to impose, update and lift sanctions autonomously. The Foreign, Commonwealth and Development Office (FCDO), which determines international sanctions policy in the UK, has already laid regulations for over 30 sanctions regimes in preparation for the transition.
While these regulations are intended to deliver substantially the same policy effects as the existing regimes, you should not assume that they are identical. In many cases the process of recreating the regimes in UK law has necessitated clearer and more specific drafting. You should check the new legislation to ensure that your activities are still compliant.
Some former EU regimes have been merged, separated or renamed by FCDO to help reflect their purpose and policy intention. For example, persons designated under the Ukraine (Sovereignty and Territorial Integrity) and those businesses subject to restrictive measures under the current EU Regulations will both move to the new Russia sanctions regime.
A list of the UK regimes, legislation and guidance already made in preparation for the end of the transition period is available on FCDO’s website. This will continue to be updated as remaining legislation is completed. OFSI’s GOV.UK pages will be updated at 11:00pm on 31 December to reflect the regulations in effect from that time.
OFSI will continue to maintain its Consolidated Lists of financial sanctions targets on its GOV.UK webpages. The lists will be updated with information from FCDO’s UK Sanctions List at 11pm on 31 December 2020 to reflect all financial sanctions designations made under Sanctions Act Regulations. In order to ensure compliance with the Regulations you may need to screen these entries as they accommodate new information. As a result of this update, you should be prepared for a significant number of changes to occur across multiple fields, such as aliases and other identifying information. These changes come about as a result of the UK having a different legal test for designations under the Sanctions Act Regulations.
FCDO will also be updating the UK Sanctions List at the same time, which will consist of all designations (financial or otherwise) made under Sanctions Act Regulations.
We recognise how important changes to the lists will be to industry and sanctions implementers, and we will continue to work closely with FCDO and industry to manage, and minimise where possible, the number of changes that will be made at 11:00pm on 31 December 2020.
On Friday 18 December, OFSI shared information about the publication of a Bridging Document on 31 December 2020. This has been developed following engagement with stakeholders to assist those who carry out automated screening of the Consolidated List. The Bridging Document will be provided to allow those who wish to do so to screen separately against certain administrative fields to minimise the number of flags on a re-screen of the full Consolidated List.
The Bridging Document is not a substitute for the Consolidated List. Use of the Bridging Document is voluntary. It remains the responsibility of the person doing the sanctions screening to ensure that their screening is accurate.
More information can be found on our website here.
The vast majority of extant licences that have been issued by OFSI under EU Regulations will continue to remain valid until they expire or are revoked. If you are uncertain whether your licence will remain valid, please contact email@example.com. New specific licences issued from 11:00pm on 31 December will be issued under licensing grounds, also known as derogations, contained in the Regulations.
You should be aware that there are some changes to financial sanctions licensing grounds compared to those under EU Regulations. The Sanctions Act Regulations clarify that reasonableness is applicable to disbursements under the legal fees licensing ground. A reasonableness test has been added to the derogation for the Routine Holding and Maintenance of funds or economic resources. A new derogation has been added – extraordinary situations – and the basic needs derogation now explicitly refers to the basic needs of individuals and basic needs of entities separately. Full definitions of the derogations can be found in OFSI’s UK financial sanctions general guidance.
Applicants should continue to apply for specific licences through the OFSI GOV.UK web pages. There is a form for applications under the Sanctions Act on our Global Human Rights regime page which may be used now and will be the standard application form across all regimes from the end of the Transition Period. For the remainder of the Transition Period and afterwards, OFSI will remain committed to engaging with licence applicants within 4 weeks of receipt of the completed application and humanitarian applications or other applications relating to a risk to life will continue to be prioritised
The power to issue financial sanctions General Licences is being introduced for the first time under many UK autonomous sanctions regimes. A General Licence allows multiple parties to undertake specified activities which would otherwise be prohibited by the Regulations without the need for a specific licence. General Licences are not a substitute for specific licences which should still be sought where appropriate. General Licences may be implemented by OFSI to respond to unforeseeable circumstances, technical implementation issues and/or where HM Treasury decides that the purpose of the regime would be better served through the issuance of a General Licence. In most cases active General Licences and accompanying guidance will be made available on OFSI’s website. General licences will include requirements to notify OFSI of your use and keep records of any activity undertaken. OFSI does not accept applications for General Licences.
You should continue to use the compliance form on the OFSI website to report any suspected breach of financial sanctions. This form will be updated at 11:00pm on 31 December and OFSI will be accepting submissions as usual. OFSI will take a case by case approach when assessing instances of non-compliance with financial sanctions restrictions. You can find the enforcement provisions for autonomous regulations under the Sanctions Act in the regulations. There is no change to the maximum penalties for breaches of financial sanctions. The maximum custodial sentence for a breach of financial sanctions is a term of 7 years imprisonment, which was introduced through the Policing and Crime Act 2017. HM Treasury’s civil monetary penalty powers also remain unchanged.
The UK’s main domestic asset-freezing legislation the Terrorist Asset Freezing etc. Act 2010 (TAFA) will be repealed at the end of the transition period. It will be replaced by a domestic counter terrorism regime under the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019, which will be managed by HM Treasury; and by an international counter terrorism regime under the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019, which has been introduced by the FCDO.
Russia: other financial restrictions
Please be aware the list of persons subject to restrictive measures in view of Russia’s actions destabilising the situation in Ukraine are listed in Schedule 2 of the Russia (Sanctions) (EU Exit) Regulations 2019. More detail is available in Section 1.2 of the accompanying statutory guidance. The entities listed in Schedule 2 are not subject to an asset freeze and therefore do not appear in the Consolidated List of asset freeze targets in the UK.
OFSI will continue to publish the Investment Ban Targets in a separate consolidated list, as it currently does, which will reflect the Schedule 2 listings from 1 January 2021. OFSI has also published specific guidance in respect of these restrictions. This guidance will come into effect at 11pm on 31 December 2020, or when the Russia (Sanctions) (EU Exit) Regulations 2019 come into force.
Guidance and Outreach
To assist stakeholders across multiple sectors to prepare for the end of the transition period, OFSI has published its UK financial sanctions general guidance to highlight the main changes. It has also published sectoral guidance on the new Russia regime. All other guidance documents will be updated to reflect the new sanctions framework and these updated versions will be available from 11:00pm on 31 December.
Along with colleagues across Government, OFSI has presented to around 2,500 stakeholders on post-Transition Period focussed webinars in the last few weeks. These webinars were in addition to the regular stakeholder events and meetings that we have been doing over the last 2 years to help ensure stakeholders are fully prepared for the end of the transition period.
We will also keep you up to date with our email alert service.
UPDATE: We also draw to your attention our subsequent (15 February 2021) posting entitled “New version of UKGC AML/CTF Guidance for casinos published”.