Finance litigation update - July 2022

FINANCE LITIGATION UPDATE – JULY 2022 18 Key changes to UK sanctions regime - The Economic Crime (Transparency and Enforcement) Act 2022 On 15 March 2022, the Economic Crime (Transparency and Enforcement) Act (the "ECA") received Royal Assent after being fasttracked through Parliament in response to the war in Ukraine. The ECA is split into three parts: • Part 1 provides for a register of overseas entities and their beneficial owners and, in certain circumstances, compels overseas entities to register if they own or wish to acquire land. For further information on Part 1, see our article: Answers to 10 key questions about how the new Economic Crime (Transparency and Enforcement) Act 2022 affects property ownership. • Part 2 expands provisions relating to unexplained wealth orders. • Part 3, which this article addresses, amends and expands sanctions provisions. Part 3 is split into two chapters: • Chapter 1 contains amendments to the imposition of monetary penalties under the Policing and Crime Act 2017 ("PCA"). • Chapter 2 contains amendments to the UK's sanctions framework under the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA"). Key changes to the PCA – Monetary Penalties • HM Treasury implements, administers, enforces and supervises financial sanctions in the UK through the Office of Financial Sanctions Implementation ("OFSI").Since April 2017, OFSI has had the power under the PCA to impose monetary (civil) penalties for a breach of financial sanctions of 50% of the total breach or up to £1 million (whichever is the greater).In order for OFSI to impose monetary penalties, it has to be satisfied on the balance of probabilities that a person or body knew or had reasonable cause to suspect that they had breached financial sanctions. The ECA removes this requirement, creating a 'strict civil liability'. • OFSI will also have the ability to publicly 'name and shame' those that have breached financial sanctions even when OFSI has decided that a monetary penalty is not appropriate. • Currently, a Government Minister is required to personally review financial penalties if requested by the person or body that OFSI intends to penalise. The ECA will allow the Minister to delegate this responsibility, streamlining the process. • These amendments are not yet in force and will take effect on a date to be announced. We understand the intention may be for these provisions to come into force in around three months' time. Key changes to SAMLA – Sanctions Regulations • The amendments to SAMLA are intended to expedite the imposition of sanctions and reduce the resources required to react quickly to developments. • The UK may now adopt autonomous sanctions (i.e. other than in compliance with a UN or other international obligation) where it is appropriate to do so for a particular purpose set out in SAMLA. There is no longer any requirement for the Government to consider whether there are good reasons to pursue that purpose or whether the imposition of sanctions is a reasonable course of action for that purpose. • The requirement for a designation to be "appropriate", which is often a question of proportionality, has also been removed. • A new urgent designation procedure has been adopted to enable the UK to designate individuals and entities (by name or description) if they have been designated by the USA, the EU, Australia or Canada (and potentially other countries in future) under a similar sanctions regime and the relevant