Financial sanctions: guidance

The Office of Financial Sanction Implementation (OFSI) of the HM Treasury has published a revised version of its so-called Russia Guidance. The guidance describes in detail the financial and investment restrictions that are included in (amended) Statutory Instrument SI 2019/855, the „Russia (Sanctions) (EU Exit) Regulations 2019“, ranging from prohibitions to deal in certain securities, to restrictions as regards the provision of loans to Russian entities. The guidance also contains a list of frequently asked questions (FAQs) in this context.
This latest revised version contains changes throughout the document which are primarily minor, editorial in nature (correcting of spelling mistakes, clarification of dates – e.g. where the year was missing, etc). However, there are some rather large changes in the section of „trust services“ (page 8) to set out existing licenses to permit the wind-down of certain trust service activities. Furthermore, the document contains three new FAQs (FAQs 50 – 52) in connection with trust services which read as follows – as cited:
FAQ 50: Can a person provide professional and business services when operating or managing a trust? (page 18)
Answer: The provision of professional and business services to persons connected with Russia is prohibited under Regulation 54C, unless permitted by a professional and business services licence (issued by the Export Control Joint Unit (ECJU) in the Department for Business and Trade (DBT)) or there is an applicable exception.
All sanctions on professional and business services continue to apply even when trust services are permitted, unless the professional or business service is permitted by a licence in respect of that professional or business service or there is an applicable exception from the professional or business services sanction.
If both professional business services and trust services sanctions apply to activities in relation to a trust, then separate licences for each activity will be required from DBT (for professional and business services sanctions) and OFSI (for trust services sanctions).
FAQ 51: What happens when an asset freeze is in place – how do the trust services sanctions interact? (page 18)
Answer: The assets of designated persons caught under Regulation 11 must remain frozen. The trust services sanctions includes an exception to permit the provision of trust services for the purpose of complying with the asset freeze (exception 60ZZB(1)(b)). This could include where an activity needs to be undertaken regarding frozen assets, and a designated person or the trustee obtains a licence or utilises an exception applicable to the asset freeze. Assets should remain frozen unless there is an applicable exception or OFSI has issued a relevant licence.
FAQ 52: How does OFSI understand “activity” in the reporting requirements under the General Licence INT/2023/2589788? (page 19)
Answer: Any person using General Licence INT/2023/2589788 must report to OFSI within 30 calendar days of undertaking an activity under the General Licence.
Reporting should cover the period of time from when the trust services provider starts to wind down the provision of the trust service until that wind down concludes. It should include steps such as notifications to regulators and amendments, novation or cancellations of contracts. This however is not an exhaustive list.