UK Introduces New Global Anti-Corruption Sanctions Regime

The Regulations: An Overview

On 26 April 2021, the UK’s first sanctions under the Global Anti-Corruption Sanctions Regulations 2021 (SI 2021/488) (“the Regulations”) came into force. The Regulations are made under the Sanctions and Anti-Money Laundering Act 2018 and combine with UK Global Human Rights regime introduced in July 2020. The sanctions are designed to capture individuals or entities profiting from bribery and misappropriation of state funds from any country outside the UK, as well as colluding with terrorists and drug trafficking.

Individuals and entities designated under the regime are included on the consolidated UK sanctions list. They are prevented from entering the UK, opening UK bank accounts, or doing business with UK businesses. Any assets that they already hold in the UK are also frozen. Those designated under the Regulations have the right to request that a minister reviews the decision and can also apply to challenge their designation in the UK courts.

The restrictions have initially targeted 22 individuals:

• Several individuals involved in serious corruption in Latin America, such as facilitating bribes to support major drug trafficking organisations.
• Fourteen individuals involved in in the diversion of $230 million of Russian state property through a fraudulent tax refund scheme uncovered by Sergei Magnitsky in 2009.
• Three individuals in South Africa for their roles in serious corruption, which caused significant damage to the country’s economy.
• A South Sudanese businessman for his involvement in the misappropriation of significant amounts of state assets.

A shift in approach

The Regulations are an indication of the UK’s tougher stance regarding sanctions. This is the second set of autonomous UK sanctions that have been introduced since the UK left the EU, following the entry into force of the global human rights sanctions regime in July 2020. Since then, the UK has imposed sanctions on 78 individuals and entities involved in serious human rights violations around the world. The UK Foreign Secretary’s statement to Parliament placed significant emphasis on enhancing the UK’s anti-corruption profile as “a global leader in tackling corruption and illicit finance.” [1]

Alignment with the United States

The sanctions regime gives UK authorities an additional tool in their arsenal, which, along with legislation such as the UK Bribery Act 2010 (“UKBA”) and the Proceeds of Crime Act 2002 (“POCA”), can be used to combat extraterritorial corruption. As set out in the UK’s 2021 Integrated Review of Defence, Development and Foreign Policy[2], the Regulations allow the UK to work with the United States and Canada, which have similar existing anti-corruption sanctions regimes. It will therefore provide an opportunity for coordination between the countries. The U.S. Treasury department welcomed the Regulations, stating in a press release that the Regulations will enable the United States and the UK to take “complementary sanctions actions where appropriate”.[3]

Unlike most UK sanctions regulations, which target specific countries or individuals within specific countries, the Regulations, along with the Human Rights sanctions in July 2020 (mentioned above)[4], focus on individuals and entities who through corrupt practices impact the economy of a country. The focus on individuals mirrors the approach taken in the United States’ Global Magnitsky program, which was issued on 20 December 2017. The Global Magnitsky program enables the United States to withhold visas and freeze financial assets of individuals or entities thought to have been involved in serious human rights violations or acts of significant corruption. The Regulations represent a further step towards the United States’ approach and it does not come as a surprise that all 22 individuals included in the first wave of designations under the Regulations have previously been sanctioned under the U.S. Global Magnitsky program.

Practical takeaways

Companies operating in the UK may need to amend their sanctions systems and controls to ensure that they are compliant with the Regulations, particularly because these Regulations reflect a divergence between EU and UK sanctions. In addition to screening against UK sanctions lists, companies will need to ensure that they are able to respond to the broad range of persons and entities caught by UK asset freezes, which includes entities owned or controlled by sanctioned persons. Companies are also advised to ensure coordination among their anti‑bribery/corruption and sanctions screening procedures, given the increasing overlap between the two areas. In particular, the results of sanctions screening may flag related anti-bribery and corruption risks that businesses should investigate.

Femi Omisore, London Trainee Solicitor, contributed to the drafting of this alert.

[1] See HM Government, “Global Anti-Corruption Sanctions Regime: Foreign Secretary's statement to Parliament, April 2021”, accessed 2 May

[2] See HM Government; “Global Britain in a competitive age The Integrated Review of Security, Defence, Development and Foreign Policy”, accessed 2 May 2021

[3] See U.S Department of Treasury; “Statement by Secretary Janet Yellen On the United Kingdom’s Establishment of a Global Anti-Corruption Sanctions Regime”, accessed 2 May, 2021

[4] See UK Government News Story; “UK announces first sanctions under new global human rights regime”, accessed 2 May 2021