UK Introduces Anti-Corruption Sanctions Regime

Background

Recently, the British government expanded its approach to economic sanctions. Using the Sanctions and Anti-Money Laundering Act 2018 (the “SAMLA”), the government implemented the UK Global Anti-Corruption Sanctions Regulations 2021[1] (the “Regulations”). The Regulations took effect on 26 April 2021 and constitute the second standalone British sanctions regime since Brexit [2].

The Regulations aim to “prevent and combat serious corruption” which is defined (regulation 4) as constituting bribery or misappropriation of property:

• Bribery: when a person provides a financial advantage to a foreign public official (“FPO”), or a FPO accepts an advantage, for the purposes of causing or rewarding that official (or another official) for improperly performing a public function.
• Misappropriation of property: when a FPO is entrusted with, or has a role in the grant or allocation of, property as a result of their position and improperly grants or allocates that property for their benefit or for another person’s benefit. [3]

Upon the Regulations entering force, the government announced its first set of related designations, targeting 22 individuals in six countries:

• 14 Russian officials involved in the USD 230 million tax fraud discovered by the late Sergei Magnitsky;
• Four individuals regarding the ‘state capture’ episode in South Africa;
• Three individuals in Honduras, Nicaragua and Guatemala, including those engaged in bribery to support drug cartels; and
• One Sudanese businessman who misappropriated state assets.

Such designated persons will face asset freezes, travel bans preventing their entry into the UK, and exclusion/removal from the UK (under section 8B of the Immigration Act 1971). They will also be unable to open a UK bank account or conduct business with UK companies. They will, however, be able to request a review of their designation and to challenge it in court.

Breaching the Regulations constitutes a criminal offence. Penalties vary according to the offence; they include imprisonment up to seven years for those who breach the asset-freeze provisions (Regulation 31(1)).

Comment

Clearly, the Regulations are to be welcomed. The government’s rhetoric emphasises that the Regulations are another example of the UK’s commitment against corruption around the world. Whilst the Regulations, as well as preceding financial crime legislation such as the Bribery Act 2010 and the corporate tax evasion offences under the Criminal Finances Act 2017, are welcome, practitioners and civil society campaigners still emphasise the need for credible and sustained resourcing for law enforcement agencies across the UK.

Click to view the full alert.

__________________

[1] See: https://www.legislation.gov.uk/uksi/2021/488/contents/made

[2] The first were the UK Global Human Rights Sanctions Regulations 2020 introduced in July 2020 (for more information on the UK’s human rights sanctions regime, please see our previous article here).

[3] Regulation 4(3).