The first UK sanctions strategy – our analysis

26 February, 2024 | 7 minute read

The government unveiled its first ever UK sanctions strategy last week to coincide with the two-year anniversary of Russia’s full-scale invasion of Ukraine. There is no doubt that this anniversary should be an important moment to take stock of how well the UK’s new post-Brexit sanctions regime is working, and to lay out the government’s plans for the future use of sanctions.

The UK’s sanctions policy has evolved at breakneck speed over the past few years, under incredible pressures. It is welcome that this strategy recognises the need to take coordinated action with allies and to reinforce sanctions implementation and enforcement – two areas widely considered critical to making sanctions effective.

But overall, for those in the anti-corruption community hoping that the government would lay out how it would use sanctions to tackle kleptocracy globally, and what lessons the UK has learned so far from the Russia sanctions regime to do so, this strategy will disappoint. 

The lack of ambition and detail for ramping up sanctions on corrupt actors, particularly through the underused Global Anti-Corruption sanctions regime, is striking. The strategy places a strong emphasis on using anti-corruption sanctions in ways that read alarmingly like business as usual.

Meanwhile, a major unanswered question is whether the government will seriously consider an independent review mechanism given the huge discretion it has to use sanctions and the lack of oversight over their use, to ensure the efficacy of its sanctions regimes going forward.

What does the UK sanctions strategy say about sanctioning corruption? 

There are certainly hints of ambition when it comes to using sanctions on corrupt actors. In his introduction, the Foreign Secretary Lord Cameron highlights demonstrating the UK’s “opposition to corruption” as one of three key uses of the UK’s independent sanctions regimes (alongside “deterring human rights abuses” and “disrupting Russia’s war machine”). The strategy also picks out the UK’s ability to freeze UK-based funds that a “corrupt leader has stolen from his country” as one of three “significant practical powers” afforded by sanctions legislation. 

But while this is a strategy for the UK’s entire sanctions policy and was never going to include a huge amount of detail on corruption sanctions, we had hoped to see more than the four lines dedicated to ‘Magnitsky’ corruption and human rights sanctions. The strategy simply states that it will “continue” using sanctions “to tackle serious corruption.” 

Continuing current levels of usage of the anti-corruption sanctions regime (the UK made just seven anti-corruption designations in 2023 vs 31 issued by the US, and as of 2022 92% of the Magnitsky sanctions for corruption enacted globally did not appear on the UK’s own anti-corruption sanctions list) means the UK government is fundamentally failing to use sanctions to end impunity for corrupt actors. 

Surprisingly, there isn’t a single mention of how sanctions could be used to tackle kleptocracy (or how the sanctions regime will work with law enforcement partners such as the Combating Kleptocracy Cell in the National Crime Agency set up after Russia’s February 2022 invasion partly to investigate sanctions evasion). This puts it out of step with a major commitment in the Economic Crime Plan 2023-26 (ECP2) to “combat kleptocracy and drive down sanctions evasion” and suggests a lack of joined-up thinking across government strategies and plans.

The strategy does include a case study of a strong coordinated sanctions designation made last year by the UK, US and Canada on the former Governor of Lebanon’s Central Bank and his associates. That designation should be a blueprint for how this regime can be used effectively in concert with other jurisdictions when done well. 

The emphasis on working with civil society, including on anti-corruption sanctions, is very welcome. But the strategy gives no assurance to civil society, whistleblowers, and others to find secure ways to submit intelligence and information about corrupt actors – something that is critical to ensuring quality information and protecting those who submit from reprisals. The UK could learn a lot from the US style of working with civil society in this regard.

What does the strategy say about sanctions enforcement?

Encouragingly, the strategy commits to “reinforce” sanctions implementation and enforcement, including by “taking robust action on non-compliance”, and highlights relevant measures and commitments in the Economic Crime and Corporate Transparency Act and ECP2. Meanwhile, the strategy’s focus on “pursuing all lawful routes” to seize Russian central bank assets for Ukraine’s benefit follows the the Prime Minister and Foreign Secretary’s apparent support for such a move. 

But so far, the UK has struggled to use its civil and criminal enforcement powers with sufficient frequency and assertiveness to crack down on sanctions evasion. 

The Office for Financial Sanctions Implementation in the Treasury for example is yet to issue a fine (and has issued just one reprimand) for breaching Russia sanctions since the February 2022 Ukraine invasion. Overall, OFSI has imposed just nine fines across all sanctions regimes since 2016 despite over 1,200 sanctions breaches being reported in that time period (meaning less than 1% of breach reports have resulted in a fine). 

Meanwhile two key court cases linked to sanctions evasion have struggled to progress. The first criminal sanctions evasion case, involving a former governor of Sevastopol in Russian-occupied Crimea, Dmitry Ovsyannikov, will be heard in March 2025, and is a critical test of whether the UK can effectively bring criminal sanctions evasion cases (the last criminal sanctions conviction was in 2011).  

The US by contrast is way ahead of the UK on sanctions enforcement. According to an overview of the enforcement actions it has taken in relation to Russia-related sanctions released to time with the anniversary of the invasion, it has charged more than 70 individuals for violating international sanctions and export controls in relation to Russia, and secured judgments to forfeit $700 million of assets. 

This suggests the UK has a long way to go to achieve the “robust action on non-compliance” it promises in the strategy.

What does the strategy say about legal challenges to sanctions? 

The strategy rightly notes that judgments on sanctions challenges – limited so far to the Russia and Belarus sanctions regime – have set “important legal precedents”, claiming they show sanctions are “well-reasoned” and “in line with the law”. Designation challenges have given the UK government almost complete carte-blanche, and the judiciary has been very deferential to the government’s administrative powers and foreign policy goals so far. A crucial court of appeal ruling this week will test how far that deference goes.

But the strategy is completely silent on how well the licensing regime is working, and what needs to be done to make it work. For example, this week’s ruling in the government’s favour over its decision to designate Anzhelika Khan (wife of Alfa Group co-founder German Khan) highlighted serious imbalances in the use of sanctions licences.

On the one hand, there were inexcusable delays in a “Kafkaesque” sanctions licensing process for permitting Khan’s spending on basic needs. But she also received licences for expenses most would deem beyond basic needs like personal staff, private healthcare and access to private schools.

Generous licences have come under scrutiny in other cases too, from Petr Aven and Mikhail Fridman to Yevgeny Prigozhin. If badly designed, licences can effectively allow sanctioned oligarchs to continue living luxury lifestyles and even, where their assets may be frozen, to run down those assets on luxury expenses.

The Khan case adds to the increasing body of evidence for why a rigorous, independent review is needed of how sanctions are operating, from designation strategy to licensing decisions and enforcement follow-up.

So where next?

It is possible (and we live in hope) that the government will lay out a fuller strategy for how it will use anti-corruption sanctions to tackle kleptocracy and grand corruption in its long awaited Anti-Corruption Strategy

If it does so we’d be looking for it to cover: 

  • how the UK envisages using anti-corruption sanctions in a consistent and objective way against egregious cases; 
  • how it will target whole kleptocratic networks rather than just individuals; 
  • how it plans to expand the legal basis for anti-corruption sanctions so that ‘abuse of function’ can be the basis for designation, making it much easier to tackle kleptocratic behaviour; and 
  • how it will ensure anti-corruption sanctions work effectively with law enforcement and the UK’s broader anti-corruption efforts, so that assets frozen under the anti-corruption sanctions regime may later be seized through civil recovery investigations where legitimate and can be frozen speedily in regime change situations.

It’s not yet clear whether that Strategy will be seen this side of an election however and, if it is, whether it will contain this level of ambition. 

Any new government that is serious about tackling kleptocracy will need to lay out a serious plan for using anti-corruption sanctions as part of an overall strategy for ending impunity for corruption. It should certainly be looking at creating an independent expert panel of high level lawyers and experts to help it do so.

Cover of the UK sanctions strategy

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