UK Law and Practice Contributed by: John Binns, BCL Solicitors LLP
2.3.2 Provision of Legal Services OFSI has granted a sequence of general licences for the payment of legal fees for or on behalf of desig - nated persons. These permit anyone to pay the fees of a DP (or an entity they own or control), subject to vari - ous thresholds (on rates, overall fees, and expenses) and reporting requirements. 2.4 Reporting Obligations on Relevant Firms “Relevant firms” are required to inform OFSI as soon as possible if they know or have reasonable cause to suspect that any person: • is a DP; or • has committed an offence under the financial sanc - tions provisions of the sanctions regulations. Legal advisers are not required to report if this would breach legal professional privilege (LPP). Relevant firms for this purpose include: • banks and other providers of financial services; • auditors, accountants, and tax advisers; • lawyers and notaries; • trust and corporate service providers; • estate agents; • casinos; • crypto-asset exchange providers and custodian wallet providers; • high-value dealers; • art market participants; • insolvency practitioners; and • letting agents. Obligations of DPs on the Russia List DPs themselves (on the Russia list) are now also sub - ject to obligations to report their assets to OFSI. If the DP is a “UK person” (which includes UK citizens and UK-incorporated companies), this extends to all funds and economic resources owned, held or controlled anywhere in the world. Otherwise, it extends only to funds and economic resources owned, held or con - trolled in the UK. In practice, many DPs will also have obligations under the equivalent regimes in the UK’s Crown Dependen -
cies (Jersey, Guernsey, and the Isle of Man) and/or Overseas Territories (which include the BVI and the Cayman Islands). 3. Recent and Future Legal Developments 3.1 Significant Court Decisions or Legal Developments The legislative, judicial, and executive frameworks for sanctions in the UK have all undergone significant developments since Russia’s full-scale invasion of Ukraine in February 2022. Legislative Developments: Expanding the Russia List From a legislative perspective, changes introduced by the Economic Crime (Transparency and Enforcement) Act 2022: • removed parliamentary scrutiny from sanctions regulations; • restricted damages available from successful chal - lenges to designations; • introduced strict liability monetary penalties for breaching financial sanctions; and • removed the specific requirement for designa - tions to be “appropriate” (though this is generally accepted to have had no effect, as designations still need to be “proportionate” under human rights law). More important than any of these however, were the sweeping changes introduced by amendment to the Russia sanctions regulations, which brought within the scope of designations a huge range of individuals and entities that may have no involvement whatever in Russia’s actions in Ukraine, but which are involved in sectors of the Russian economy deemed to have economic or strategic significance. The use of this power to drive an exponential expansion of the list of designated persons has vastly increased the impact of sanctions in the years since then. Court Decisions: The Eugene Shvidler Challenge This expansion contributed in turn to a wave of court decisions on designation challenges under Section
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