international regulatory enforcement
UK Government Uses Sanctions to Target Human Rights Contraventions
By Arun Srivastava, Simon Airey, Tom Best, and Scott Flicker
In the wake of the ongoing Brexit process, the UK Government has today (6 July) signalled its intention to use unilateral financial sanctions to target foreign nationals alleged to be involved in human rights abuses. The UK Office of Financial Sanctions (“OFSI”) announced targeted sanctions against 47 foreign nationals in furtherance of that intention.
The Sanctions & Anti-Money Laundering Act 2018 ("SAMLA") was introduced to domesticate EU financial sanctions regulations into UK laws. SAMLA was, however, supplemented to include “Magnitsky Act”-style powers which allow UK authorities to take unilateral action to address human rights abuses. The Government has presented this in a headline grabbing way of targeting the “buying of property” and “shopping” in fashionable parts of London. This reflects long-held concerns that the UK’s open financial system and real estate market are open to abuse by foreign nationals intending to launder the proceeds of corruption or other unlawful conduct.
The UK sanctions announced on 6 July target Russian, North Korean, Myanmarese and Saudi Arabian nationals and organisations. The sanctions freeze the UK assets of those named as well as preventing those persons from entering the UK.
The new UK powers under SAMLA have two main purposes:
To enable the creation of a national sanctions framework, where the UK can impose its own sanctions, as opposed to adopting EU and UN sanctions, for the following reasons:
to comply with UN obligations or other international obligations;
to further the prevention of terrorism;
to secure national security or international peace and security;
to further foreign policy objectives; and
to provide accountability for or be a deterrent to gross violations of human rights.
To enable the updating of the UK’s national anti-money laundering and counter-terrorist finance regime by making provision for the purposes of the detection, investigation and prevention of money laundering and terrorist financing, and to implement standards published by the Financial Action Task Force (“FATF”) relating to combating threats to the integrity of the international financial system. The UK previously adopted EU directives.
These developments supplement the provisions introduced by the Criminal Finances Act 2017 which gave UK authorities the powers to obtain an Unexplained Wealth Order (“UWO”) against any person suspected of “serious crime” or who is connected to such a person, or a Politically Exposed Person who is not a citizen of the European Economic Area. An UWO requires the recipient to explain how an asset was funded and the source of those funds and may be obtained against any person, whether in the UK or abroad, relating to any asset over £50,000 in value whether situated in the UK or abroad. SAMLA also introduced provisions allowing the court to impose an interim freezing order over suspect assets, to secure the position pending any subsequent application for a forfeiture order. The power has famously been used to target the wife of a Kazakh official who did indeed engage in shopping sprees at the leading department store in London.
These developments continue to signal the UK’s new, independent approach to implementing its own financial sanctions in the UK with the potential for greater unilateral action by the UK in the future.