INTRODUCTION
1. The Sanctions and Anti-Money Laundering Act 2018 received Royal Assent on 23 May 2018.
a. http://www.legislation.gov.uk/ukpga/2018/13/pdfs/ukpga_20180013_en.pdf
2. Prior to this Act the UK’s domestic sanctions regimes were confined to terrorism legislation.
3. The Sanctions and Money Laundering Act is therefore a significant piece of legislation and represents a key aspect of the “Brexit legislation” which is required to plug a gap which had previously been filled by EU law.
4. When this Act comes into force, England and Wales will have the power to impose sanctions independently of the international community.
CHANNEL ISLANDS
1. Prohibitions and requirements under sanctions Regulations can apply to
a. all conduct in the UK and
b. also to conduct elsewhere by a UK person (which is a UK national or a body incorporated or constituted under any part of the UK).
2. There is also a mechanism to extend application to the Channel Islands, Isle of Man or any British overseas territory.
FUTURE IMPACT
1. Significant as this legislation is, it is unlikely that we will see the UK issue sanctions unilaterally in the near future.
2. The operative provisions of the Act are not yet in force; this will happen via secondary legislation and the House of Lords debates indicate the timetable for bringing in this legislation will be in line with Brexit. Accordingly, until that process has been completed, UK sanctions will continue to mirror the EU level.
3. When the relevant sections of the Act do come into force this new domestic legislation will create an autonomous system, which will in theory permit the UK to diverge from the EU and the UN. While that may sound like an unlikely prospect at the time of writing, in recent months we have seen the US defy international opinion and take FOR EXAMPLE
a. a contrary view on the Iranian Joint Comprehensive Plan of Action.
b. On that occasion the UK government stood with the wider international community, however given these politically uncertain times it may be premature to simply assume continued solidarity.
4. Ultimately, whether the UK will ever diverge from the international community in terms of financial sanctions cannot be predicted with any certainty at this distance; what is nevertheless clear is that the Act creates the domestic framework for that to happen at least in principle, which makes this an important and noteworthy development.
The purpose of the sanctions
Sanction regulations may be made where the Minister considers it appropriate to do so for either:
1. the purposes of compliance with a UN obligation,
2. the purposes of compliance with any other international obligation, or
3. for a purpose stated within section 1(2) of the Act.
a. These are, for example, if the appropriate Minister considers that carrying out that purpose would be in the interests of national security or the interests of international peace and security.
b. The full exhaustive list of what are collectively referred to as “discretionary purposes” is set out within that section of the Act.
c. a further discretionary purpose has been inserted to provide “accountability for or be a deterrent to gross violations of human rights”.
The test for imposing sanctions regulations
1. In the majority of situations, sanctions will be imposed where the Minister considers it appropriate in order to comply with a UN Security Council Resolution or other international obligation.
2. However, where the sanctions are imposed for one of the discretionary purposes set out in the Act, there are additional considerations that will apply when deciding whether it is appropriate to make these regulations.
3. The Minister may not decide that it is appropriate to make regulations for any of the discretionary purposes unless he or she has considered whether:
4. there are good reasons to pursue that purpose and has determined that there are, and
5. the imposition of sanctions is a reasonable course of action for that purpose and has determined that it is.
Executive Summary
1. SAMLA is, in many respects, a complicated way of ensuring business as usual. Its genesis was to make sure that the Consolidated List could continue to operate after Brexit and to allow the necessary powers to make changes to the list as it stands when Brexit occurs.
2. However, the Government has taken the opportunity to nuance some of the ways in which financial sanctions can be made and how their application will be described.
3. The desire to allow the flexibility that secondary legislation provides has been tempered by mandating conditions that must apply before actions can be taken, reports to be published, and by imposing the affirmative resolution procedure.
4. The Government has also already set out its intended approach to exceptions and licences under SAMLA.
5. Essentially, although much is new, businesses for whom sanctions compliance is a frequent issue are unlikely to find much practical change.
FULLER BRIEFING-
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