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UK Businesses Under Investigation for Violating Russia Sanctions

Updated: Oct 22


In response to Russia’s 2022 invasion of Ukraine, the UK and other nations imposed strict sanctions to curb Russia's ability to fund its war efforts. A key part of these sanctions was a cap on Russian oil prices, aimed at limiting the country’s revenue from its primary export. However, investigations suggest that UK-linked firms may be breaking these rules by helping Russia sell oil at prices higher than allowed. 


Despite the ongoing investigations, no penalties have been issued, raising questions about the effectiveness of the sanctions. 


Purpose of Sanctions The UK’s sanctions on Russian oil limit the price to $60 per barrel to reduce Russia's income from its oil exports. Oil is a major source of revenue for Russia, and keeping prices low is intended to diminish its financial capacity. UK-linked businesses involved in transporting or insuring Russian oil are required to adhere to these rules. If they facilitate oil sales above the $60 limit, they are violating sanctions. 


Data obtained by the BBC reveals that, since December 2022, 52 UK-linked businesses have been investigated for possibly breaching the oil price cap. These investigations are managed by the Office of Financial Sanctions Implementation (OFSI), a unit within the Treasury responsible for enforcing sanctions. As of August 2023, 37 of these investigations are still active, while 15 have concluded, but none have resulted in fines. 


Many of the firms under investigation are thought to be maritime insurance companies, which play a critical role in global oil shipping. If found to have insured or transported oil sold above the price cap, these firms could face significant penalties. However, the lack of enforcement so far has sparked criticism. 


With 37 investigations still ongoing, pressure is mounting on the government to take more decisive steps. Critics argue that if no penalties are issued, the sanctions risk becoming ineffective, allowing UK businesses to continue indirectly supporting Russia’s oil revenues, and by extension, its war efforts in Ukraine. 


EU Implements new Sanctions against Russia 


The UK's challenges in enforcing oil price caps on Russian exports come at a time when the EU is also intensifying its efforts to counter Russia’s destabilising activities. On 8th October 2024, the Council of the EU enacted new sanctions under Regulation (EU) 2024/2642, which target individuals and entities involved in actions that undermine democratic processes and security. This coordinated international response demonstrates a unified stance against Russia’s influence, reinforcing the importance of sanctions in curbing both its economic capabilities and its hybrid activities abroad.  Source BBC 


Are you exporting or thinking of exporting to Russia but unsure about whether your goods require a licence or compliance? Are you in need of expert guidance through the minefield of export licences? 


The Chamber offers a comprehensive array of export control and licence services, both in Manchester and beyond, available for face-to-face or virtual consultations: 


  • In-house and Bespoke Export Control Compliance Training: We provide tailored training, whether in-house or virtually, covering topics ranging from general compliance to specific business processes and procedures. 

  • Export Control Audit: Our team conducts internal business audits to assess your Business Management System's compliance with export control regulations. This can be part of your annual BMS audit schedule or in preparation for an Export Control Joint Unit (ECJU) visit/audit. 

  • Export Control Managed Service: Acting as your trusted partner, we serve as the central point for all licensing activities, ensuring alignment with your internal business processes and export control regulations. 

  • Product Codification: We audit and codify your products against the UK Export Control List, ensuring accurate definitions and understanding of licensing requirements. This typically includes an initial site visit for a comprehensive product assessment. 

  • Licence Application: We act on your behalf to ensure timely and accurate license applications, ensuring a seamless export process. These services can often be conducted remotely, especially if a prior product codification visit has been completed. 

  • SPIRE Set up and Management: We facilitate the setup of an HMRC SPIRE Account on your behalf and, if needed, provide ongoing account management to ensure efficient license management through the HMRC system. This can be accomplished remotely, depending on your IT requirements. 

  • ECJU Visit Representation: We offer representation services during an ECJU Audit, typically recommended when one or more of the above services have been availed. 


For more detailed information on any of the services listed above or to discuss your specific requirements, please don't hesitate to contact our expert team at international@gmchamber.co.uk. We're here to assist you in navigating the complexities of export control and licensing with confidence. 

 

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