UK Trends and Developments Contributed by: John Binns, BCL Solicitors LLP
sions, and harder for designated persons (DPs) and others to live with or challenge them. They included: • removal of most elements of parliamentary scru - tiny, including the requirement for the FCDO to report to parliament when amending regulations; • removal of the need for designations to be “appro - priate” (though the courts have since confirmed that they would still need to be “proportionate” under human rights laws); • restriction of damages in favour of DPs who suc - cessfully challenged their designations, to cases where the courts found bad faith on the FCDO’s part; and • the creation of “strict liability” monetary penalties for financial sanctions breaches. Targeting Russia Notably, these changes were included in a piece of primary legislation primarily aimed at economic crime. The rhetoric in parliament from Johnson and Starmer alike made striking links between the two, with Starm - er keen to press the point that Johnson’s government had benefited (he said) from money “stolen from the Russian people”. By this time, the criteria for designations under the Russian regime had also been vastly expanded to include not just those actively involved in challenging Ukraine’s territorial integrity or sovereignty but also anyone involved in sectors of the Russian economy deemed economically or strategically significant. In terms of SAMLA’s Section 11, the (present or past) involvement in such sectors was deemed to be a “specified activity”, while the definition of “associ - ated” was later expanded to include, among others, close family members. Rationale and risks Any expectation that sanctions laws would define “specified activity” or “association” in a way that connoted moral blame or knowing involvement in the activity of the government that had been defined as problematic was arguably abandoned (at least in legal terms) in making these amendments. Rather than designating people who were themselves part of the problem (here, the invasion of Ukraine), Rus - sia’s sanctions were now aimed primarily at damaging
the Russian economy, using those who were (or had been) involved in Russian business, and their family members, as a means to that end. The early examples of the Sanctions Designation Forms (SDFs) provided to DPs seemed to suggest that the FCDO believed that the assets of Russian “oli - garchs” – a term that appears to be broadly applied to anyone with significant business interests in Russia – were held at the request or under the direction of the Russian government. However, over time, the FCDO appeared to adopt a more relaxed stance, indicating that the primary goal of these designations was to cause economic harm to Russia, regardless of wheth - er the designated persons had any genuine influence over the Russian government. Despite this legal shift, the popular view and policy agenda towards Russia has remained influenced by a conflation of sanctions (as a means of tackling the actions of its government) with economic crime (which connotes a moral judgment about activities and/ or the derivation of property). Perhaps the starkest illustration of this lies in the combined AML/sanctions compliance functions of banks and other regulated businesses – which, since 2022 (if not before), have reflexively treated any customer who does business or resides in Russia as “suspect”, and, in many cases, Russian citizens as a class. Rightly or wrongly, Rus - sians’ money is often treated as “dirty” until proven otherwise. Challenges to designations For those who had thought that DPs would have a better prospect of challenging their designations at the High Court in London than at the EU courts in Lux - embourg, the two-stage process of ministerial reviews followed by court reviews under SAMLA (Sections 23 and 38 respectively) has been a disappointment. Gen - erally, the process of obtaining a DP’s SDF and await - ing a ministerial decision has been slow, and there has been a predictable tendency for the FCDO to adhere to its original decisions. Variations in the evidential basis for designations, while arguably demonstrating a principled approach to the process, have presented additional challenges and contributed to a sense of “moving goalposts”.
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