International Regulatory Enforcement (PHIRE)

UK implements sanctions on Somalia in preparation for Brexit

July 09, 2020

Gesa Bukowski, Arun Srivastava and Tom Best

Within three days of announcing the first-ever sanctions implemented under the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA"), the UK Government has announced further SAMLA-based sanctions. On 9 July 2020, the Somalia (Sanctions) (EU Exit) Regulations 2020 ("Somalia Regulations") were put in place to facilitate the continuation of a sanctions regime targeting Somalia on the exit of the European Union at 11pm on 31 December 2020.

The UK, as a member of the United Nations, is required to implement sanctions passed by resolutions of the UN Security Council. Such measures are implemented through EU Regulations that take direct legal effect in all EU member states. As sanctions regimes are evolving areas that need to adapt to the prevailing circumstances, the UK Government took the view, when considering the implications of Brexit, that merely transposing EU Regulations on financial sanctions into national law was not sufficient.

Departure from the European Union means that EU laws will cease to apply in the UK. To minimise disruption, legislation has been passed to "on-shore" or domesticate EU laws to carry them across post-Brexit. This includes financial sanctions, on-shoring of which will be achieved through SAMLA. However, SAMLA goes further than merely transposing EU legislation into national law, and instead gives the UK Government the power to impose unilateral sanctions, thereby operating its own sanctions regime.

The Somalia Regulations do not impose new sanctions, but instead will replace, with substantially the same effect, existing EU legislation and related UK regulations giving effect to UN sanctions imposed on Somalia. As the UK is preparing for the end of the withdrawal period on 31 December 2020, it can be expected that similar regulations concerning different countries will be passed under SAMLA. Whilst the Somalia Regulations do not impose new sanctions different from the current regime, businesses should be mindful of the wide powers of the UK Government under SAMLA and be prepared to comply with novel sanctions as the UK is gearing up to "defend the rules-based international order" and continue its roles as "a global leader on sanctions".[1]

How the UK coordinates with other authorities implementing their own sanctions regimes, such as the US, Canada, Australia, EU and others, in connection with ongoing major geopolitical and other developments will be closely watched as the Brexit process becomes a legal and practical reality.  Financial institutions and companies with potential sanctions exposure will needed to increasingly take account of the UK as an independent source of enforcement risk as 2020 turns to 2021 and beyond.

[1] See the report under section 2(4) of SAMLA on the Somalia Regulation at paragraph 2.

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