British “Magnitsky sanctions” against human rights abusers globally

Overview

Yesterday, the British government announced new sanctions - the UK Global Human Rights Sanctions Regulations 2020^[1] ("the Regulations"), pursuant to the Sanctions and Anti-Money Laundering Act 2018. This is the first time that the UK has imposed its own sanctions against persons involved in violations of human rights.

The Regulations have been described as the UK’s Magnitsky law, which refers to the late Sergei Magnitsky, a Russian lawyer who died in a Moscow prison following inhumane treatment and denial of medical treatment during 2009. Mr Magnitsky had been investigating a major USD 230 million fraud against Hermitage Capital Management, a UK-based investment firm.  This targeted sanctions initiative in Mr Magnitsky’s name is largely the result of a campaign led by Bill Browder, founder of Hermitage Capital, over the years since Mr Magnitsky’s death.

The Regulations

The Regulations empower the Foreign Secretary to designate persons (whether or not UK persons) according to specific criteria and thereby impose asset freezes and travel bans on those persons. In its announcement to Parliament, the government stated that these long-awaited measures will "hold to account the perpetrators of the worst human rights abuses".

The Regulations’ express purpose is to deter, and provide accountability for, serious violations of an individual’s:

• right to life;
• right not to be subjected to torture or cruel, inhumane or degrading treatment or punishment; or
• right to be free from slavery, not to be held in servitude or required to perform forced or compulsory labour.

In many countries, corruption both enables and is symptomatic of human rights abuses. For example, a corrupted judiciary would facilitate arbitrary detention and conduct unfair trials. Currently, however, the Regulations do not empower the government to designate persons involved in bribery and corruption, which is an approach taken by some other states in their approach to the Magnitsky initiative. Nonetheless, the Foreign Secretary informed Parliament yesterday that, “we will continue to explore expanding this regime to include other human rights, and I can tell the House that we are already considering how a corruption regime could be added to the armoury of legal weapons we have. In particular, Honourable Members will be interested to know that I am looking at the UN convention against corruption, and practice already underway under the frameworks in jurisdictions such as the United States and Canada.”^[2]

Designation criteria

Significantly, the designation criteria in Regulation 6 are broadly defined. Subject to the government having reasonable grounds to suspect, it may designate any person who, inter alia:

• “is responsible for or engages in” human rights abuses;
• “facilitates, incites, promotes or provides support for such an activity”;
• “provides financial services, or makes available funds, economic resources, goods or technology, knowing or having reasonable cause to suspect that those financial services, funds, economic resources, goods or technology will or may contribute to such an activity”;
• “provides financial services, or makes available funds, economic resources, goods or technology to a person [responsible for or engaged in human rights abuse]”;
• who “profits financially or obtains any other benefit from an activity” violating human rights.^[3]

Therefore, the Regulations empower the government to designate those who do business with individuals or groups involved in the principal violations. Corporate compliance officers in many sectors, but particularly in financial and professional services, should note the implications here for client due diligence and ongoing monitoring.

The UK's new regime targets both individuals and organisations. The 49 targets announced yesterday consist of:

• 25 Russian nationals implicated in Magnitsky's death;
• 20 Saudi Arabian officials alleged to have been involved in the murder of journalist Jamal Khashoggi in 2018;
• two Myanmar generals responsible for the systemic killing of the Rohingya people; and
• two organisations involved in forced labour camps in North Korea.

The Regulations introduce a criminal offence for any UK individuals and companies (whether within the UK or overseas) who:

• breach the immigration and financial sanctions against designated persons; or
• enable or facilitate a breach or evasion of the financial prohibitions against designated persons.

Various commentators have broadly welcomed the Regulations and been somewhat surprised by the robust position adopted by the government’s first wave of designations. Those who do business around the world, as well as human rights campaigners and foreign policy specialists, will watch this developing area of UK law and practice with interest in the months ahead.

Brown Rudnick advised Hermitage Capital in investigating those persons involved in the substantial fraud, and those responsible for Mr Magnitsky’s death.

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For more information, please contact Anupreet Amole, Neil Micklethwaite, Neill Shrimpton or Olga Bischof.

^[1]https://www.legislation.gov.uk/uksi/2020/680/made. The accompanying statutory guidance is at https://www.gov.uk/government/publications/global-human-rights-sanctions-guidance/global-human-rights-sanctions-guidance

^[2]https://hansard.parliament.uk/commons/2020-07-06/debates/24B78A01-061C-48A8-AA92-8E53C17516E3/GlobalHumanRightsSanctionsRegime

^[3] Regulation 6(3).

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