The Russia (Sanctions) (EU Exit) Regulations 2019

CHAPTER 2 U.K. Other financial and investment restrictions

Dealing with transferable securities or money-market instruments U.K.

16.—(1) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (2) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(2) A transferable security or money-market instrument falls within this paragraph if it has a maturity exceeding 30 days and is issued after 1 August 2014 by—

(a) a person mentioned in any of paragraphs 1 to 5 of Schedule 2;

(b) a person, other than an individual, which is—

(i) incorporated or constituted under the law of a non-UK country, and

(ii) owned by a person within sub-paragraph (a); or

(c) a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (a) or sub-paragraph (b).

(3) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4) A transferable security or money-market instrument falls within this paragraph if it has a maturity exceeding 30 days and is issued after 12 September 2014 by—

(a) a person mentioned in any of paragraphs 6 to 11 of Schedule 2;

(b) a person, other than an individual, which is—

(i) incorporated or constituted under the law of a non-UK country, and

(ii) owned by a person within sub-paragraph (a); or

(c) a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (a) or sub-paragraph (b).

[F1 (4A) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4B) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4B) A transferable security or money-market instrument falls within this paragraph if it has a maturity exceeding 30 days and is issued on or after 1st March 2022 by—

(a) a person, other than an individual, which is—

(i) incorporated or constituted under the law of any part of the United Kingdom, and

(ii) owned by a person falling within Schedule 2; or

(b) a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (a).

(4C) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4D) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4D) A transferable security or money-market instrument falls within this paragraph if it is issued on or after 1st March 2022 by—

(a) a person connected with Russia, which is not—

(i) a person falling within Schedule 2,

(ii) a person, other than an individual, which on 1st March 2022 is domiciled in a country other than Russia, or

(iii) a person, other than an individual, which on 1st March 2022 is a branch or subsidiary, wherever located, of a person mentioned in paragraph (ii);

(b) a person, other than an individual, which is owned by a person falling within sub-paragraph (a); or

(c) a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (a) or sub-paragraph (b).

(4E) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4F) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4F) A transferable security or money-market instrument falls within this paragraph if it is issued on or after 1st March 2022 by, or on behalf of, the Government of Russia.]

[F2 (5) Paragraphs (1), (3), (4A), (4C) and (4E) are subject to Part 7 (Exceptions and licences).]

(6) A person who contravenes a prohibition in paragraph [F3 (1), (3), (4A), (4C) and (4E)] commits an offence.

(7) For the purposes of this regulation, and regulations 17 (loans and credit arrangements) and 59 (exceptions relating to loans and credit arrangements), a person (“C”) is “owned” by another person (“P”) if P—

(a) holds directly or indirectly more than 50% of the shares in C, or

(b) holds directly or indirectly more than 50% of the voting rights in C.

(8) Schedule 1 applies for the purpose of interpreting paragraph (7).

(9) For the purposes of this regulation, a reference to “dealing with” a transferable security or money-market instrument includes a reference to purchasing or selling the security or instrument, providing investment services relating to the security or instrument or assisting in the issuance of the security or instrument.

(10) In this regulation—

“investment services” means—

(a)

the reception and transmission of orders in relation to one or more financial instruments,

(b)

the execution of orders on behalf of clients,

(c)

dealing on own account,

(d)

portfolio management,

(e)

the provision of investment advice,

(f)

the underwriting of financial instruments or placing of financial instruments on a firm commitment basis,

(g)

the placing of financial instruments without a firm commitment basis, or

(h)

any service in relation to the admission to trading on a regulated market or trading on a multilateral trading facility;

“money-market instrument” means an instrument of a kind normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers, excluding instruments of payment;

“non-UK country” means a country that is not the United Kingdom;

“transferable security” means a security, negotiable on the capital market, of any of the following kinds, but excluding instruments of payment—

(a)

shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares;

(b)

bonds or other forms of securitised debt, including depositary receipts in respect of such securities;

(c)

any other securities giving the right to purchase or sell any security of a kind mentioned in paragraph (a) or (b).

Textual Amendments

F1 Reg. 16(4A)-(4F) inserted (1.3.2022) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (S.I. 2022/194), regs. 1(2), 5(a)

F2 Reg. 16(5) substituted (1.3.2022) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (S.I. 2022/194), regs. 1(2), 5(b)

F3 Words in reg. 16(6) substituted (1.3.2022) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (S.I. 2022/194), regs. 1(2), 5(c)

Commencement Information

I1 Reg. 16 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Loans and credit arrangements U.K.

17.—(1) A person (“P”) must not directly or indirectly grant a relevant loan if P knows, or has reasonable cause to suspect, that P is granting a relevant loan.

(2) A person must not directly or indirectly enter into any arrangement to grant a relevant loan if the person knows, or has reasonable cause to suspect, that the arrangement relates to a relevant loan.

(3) Paragraphs (1) and (2) are subject to [F4 Part 7 (Exceptions and licences)].

(4) A person who contravenes a prohibition in paragraph (1) or (2) commits an offence.

(5) In this regulation—

[F5 “category 1 loan” means a loan or credit—

(a)

with a maturity exceeding 30 days,

(b)

made or granted to—

(i)

a person falling within Schedule 2,

(ii)

a person, other than an individual, which is—

(aa)

incorporated or constituted under the law of a non-UK country, and

(bb)

owned (within the meaning of regulation 16(7)) by a person within paragraph (i), or

(iii)

a person, other than an individual, acting on behalf or at the direction of a person within paragraph (i) or paragraph (ii), and

(c)

which is first made or granted at any time after IP completion day;

“category 2 loan” means a loan or credit—

(a)

with a maturity exceeding 30 days,

(b)

made or granted to a person, other than an individual, which is—

(i)

incorporated or constituted under the law of any part of the United Kingdom, and

(ii)

owned (within the meaning of regulation 16(7)) by a person falling within Schedule 2, and

(c)

which is first made or granted at any time on or after 1st March 2022;

“category 3 loan” means a loan or credit—

(a)

with a maturity exceeding 30 days,

(b)

made or granted to a person, other than an individual, which is—

(i)

connected with Russia,

(ii)

owned (within the meaning of regulation 16(7)) by a person within sub-paragraph (i), or

(iii)

a person, other than an individual, acting on behalf or at the direction of a person within paragraph (i) or paragraph (ii),

(c)

which is first made or granted at any time on or after 1st March 2022, and

(d)

which is not—

(i)

a category 1 loan, a category 2 loan or a category 4 loan, or

(ii)

a loan made or granted to—

(aa)

a person, other than an individual, which on 1st March 2022 is domiciled in a country other than Russia,

(bb)

a person, other than an individual, which is owned by a person falling within sub-paragraph (aa), or

(cc)

a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (aa) or sub-paragraph (bb);

“category 4 loan” means a loan or credit—

(a)

made or granted to the Government of Russia,

(b)

which is first made or granted at any time on or after 1st March 2022;]

“non-UK country” means a country that is not the United Kingdom;

[F6 “relevant loan” means a category 1 loan, a category 2 loan, a category 3 loan or a category 4 loan;]

F7 ...

Textual Amendments

F4 Words in reg. 17(3) substituted (1.3.2022) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (S.I. 2022/194), regs. 1(2), 6(a)

F5 Words in reg. 17(5) inserted (1.3.2022) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (S.I. 2022/194), regs. 1(2), 6(b)(i)

F6 Words in reg. 17(5) substituted (1.3.2022) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (S.I. 2022/194), regs. 1(2), 6(b)(ii)

F7 Words in reg. 17(5) omitted (1.3.2022) by virtue of The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (S.I. 2022/194), regs. 1(2), 6(b)(iii)

Commencement Information

I2 Reg. 17 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

[F8 Correspondent banking relationships etc. U.K.

17A.— (1) A UK credit or financial institution (“C”) (“the correspondent”) must not establish or continue a correspondent banking relationship with the following (“the respondent”)—

(a) a designated person (“D”),

(b) a UK credit or financial institution, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by D, or

(c) a non-UK credit or financial institution, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by D,

if C knows, or has reasonable cause to suspect, that the correspondent banking relationship is with a designated person.

(2) C must not process a sterling payment to, from or via –

(a) D,

(b) a UK credit or financial institution, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by D, or

(c) a non-UK credit or financial institution, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by D,

if C knows, or has reasonable cause to suspect, that the sterling payment is to, from or via such a person.

(3) Paragraphs (1) and (2) are subject to Part 7 (Exceptions and licences).

(4) A person who contravenes a prohibition in paragraph (1) or (2) commits an offence.

(5) For the purposes of this regulation, a reference to ‘processing’ a sterling payment includes the clearing and settlement of such a payment.

(6) In this regulation—

“correspondent banking relationship” means the provision of banking services by a correspondent to a respondent including providing a current or other liability account and related services, such as cash management, international funds transfers, cheque clearing, providing customers of the respondent with direct access to accounts with the correspondent (and vice versa) and providing foreign exchange services;

“designated person” means a person who is designated under regulation 5 (power to designate persons) for the purposes of this regulation;

“non-UK credit or financial institution” means—

(a)

a person, other than an individual, which would satisfy the threshold conditions for permission under Part 4A of the Financial Services and Markets Act 2000 if it had its registered office (or if it does not have one, its head office) in the United Kingdom, or

(b)

an undertaking, other than a UK credit or financial institution, which by way of business—

(i)

operates a currency exchange office,

(ii)

transmits money (or any representation of monetary value) by any means, or

(iii)

cashes cheques that are made payable to customers;

“UK credit or financial institution” means—

(a)

a person that has permission under Part 4A of the Financial Services and Markets Act 2000 (permission to carry on regulated activities), or

(b)

an undertaking domiciled in the United Kingdom which by way of business—

(i)

operates a currency exchange office,

(ii)

transmits money (or any representation of monetary value) by any means, or

(iii)

cashes cheques that are made payable to customers.]

Textual Amendments

F8 Reg. 17A inserted (1.3.2022) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 (S.I. 2022/194), regs. 1(2), 7

Investments in relation to [F9 non-government controlled Ukrainian territory] U.K.

18.—(1) A person (“P”) must not carry on an activity mentioned in paragraph (2) if P knows, or has reasonable cause to suspect, that P is carrying on such an activity.

(2) The activities in this paragraph are—

(a) directly or indirectly acquiring or extending a participation, or acquiring any ownership interest, in land located in [F10 non-government controlled Ukrainian territory];

(b) directly or indirectly acquiring or extending a participation, or acquiring any ownership interest in or control over, a relevant entity;

(c) directly or indirectly granting any loan or credit, entering into any arrangement to grant any loan or credit, or otherwise providing funds, including for example equity capital—

(i) to a relevant entity, or

(ii) for the documented purpose of financing any such entity;

(d) directly or indirectly establishing any joint venture—

(i) in [F10 non-government controlled Ukrainian territory], or

(ii) with a relevant entity;

(e) providing investment services directly related to an activity referred to in sub-paragraphs (a) to (d) above.

(3) Paragraph (1) is subject to Part 7 (Exceptions and licences).

(4) A person who contravenes a prohibition in paragraph (1) commits an offence.

(5) In this regulation—

“investment services” has the same meaning as it has in regulation 16;

“relevant entity” means a person, other than an individual, which has a place of business located in [F11 non-government controlled Ukrainian territory].

Textual Amendments

F9 Words in reg. 18 heading substituted (30.3.2022 at 5.00 p.m.) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022 (S.I. 2022/395), regs. 1(2), 10(a)

F10 Words in reg. 18(2) substituted (30.3.2022 at 5.00 p.m.) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022 (S.I. 2022/395), regs. 1(2), 10(b)

F11 Words in reg. 18(5) substituted (30.3.2022 at 5.00 p.m.) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022 (S.I. 2022/395), regs. 1(2), 10(b)

Commencement Information

I3 Reg. 18 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

[F12 Provision of financial services relating to foreign exchange reserve and asset management U.K.

18A.— (1) A person (“P”) must not provide financial services to a person mentioned in paragraph (2) where—

(a) the financial services are for the purpose of foreign exchange reserve and asset management; and

(b) P knows, or has reasonable cause to suspect, that the financial services are provided to such a person.

(2) The persons mentioned in this paragraph are—

(a) the Central Bank of the Russian Federation,

(b) the National Wealth Fund of the Russian Federation,

(c) the Ministry of Finance of the Russian Federation,

(d) a person owned or controlled directly or indirectly (within the meaning of regulation 7) by a person mentioned in sub-paragraphs (a) to (c), or

(e) a person acting on behalf of or at the direction of a person mentioned in sub-paragraphs (a) to (c).

(3) Paragraph (1) is subject to Part 7 (Exceptions and licences).

(4) A person who contravenes the prohibition in paragraph (1) commits an offence.]

Textual Amendments

F12 Reg. 18A inserted (1.3.2022 at 5.00 p.m.) by The Russia (Sanctions) (EU Exit) (Amendment) (No. 5) Regulations 2022 (S.I. 2022/205), regs. 1(2), 3(1)