UK adopts bespoke global anti-corruption sanctions regime
On 26 April 2021, the UK Government introduced the Global Anti-Corruption Sanctions Regulations 2021 ("the Regulations"), the latest addition to the autonomous sanctions regime and a new weapon to combat extraterritorial corruption. Readers may remember that the UK's autonomous sanctions regime came into effect at 11 pm on 31 December 2020, when the transition period for the country's exit from the European Union expired.
Tough sanctions for the seriously corrupt
The Regulations reflect the potentially wide scope of the autonomous sanctions regime, allowing the UK Government to designate individuals and entities suspected to be directly or indirectly involved in serious corruption (which, for the purposes of the Regulations, comprises bribery and misappropriation of property). The designation of individuals under the Regulations is not limited to foreign public officials but may also be applied to anyone suspected to be an “involved person” (broadly defined to include, for example, those facilitating serious corruption). The legal criteria for designations under the Regulations have been set out in a policy note published by the UK Government. The Regulations will complement the criminal offences contained in the UK Bribery Act 2010 and the Proceeds of Crime Act 2002.
22 individuals have been designated under the Regulations so far. These individuals include 14 Russians involved in the multimillion-dollar tax fraud exposed by the late Sergei Magnitsky, as well as individuals involved in high-profile corruption cases in South Africa, South Sudan and Latin America. Due to the effect of the Regulations, these individuals have now been stopped from entering and channelling money through the UK, opening UK bank accounts and doing business with UK businesses. Any assets that they hold in the UK should also have been frozen. Designated individuals/entities have the right to request that a minister reviews their designation and can also challenge their designation in the UK courts.
Fast-moving sanctions regime
The Regulations represent a substantial extension of the UK Government's sanctions regime, allowing the prompt imposition of sanctions for serious corruption even where the individual is outside the jurisdiction of the UK criminal courts and cannot therefore be prosecuted under UK anti-bribery or anti-money laundering legislation. These powers closely mirror those introduced under the U.S. Global Magnitsky Human Rights Accountability Act (“Magnitsky Act”) and were released in “close coordination” with the U.S.. It therefore comes as no surprise that the majority of the 22 individuals designated under the Regulations have previously been sanctioned under the Magnitsky Act. In the post-Brexit era, we can expect more cooperation between the two countries with respect to sanctions.
Impact on businesses
UK businesses will need to review their sanctions systems and controls to ensure that they cater for the Regulations and consider, as part of their due diligence checks, the risk of their overseas clients being sanctioned.
More broadly, businesses seeking to comply with global regimes will need to be mindful of the important differences between the EU and UK regimes post-Brexit, meaning that compliance with one does not guarantee compliance with the other.