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The UK’s global anti-corruption sanctions regime is now in place

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The UK’s global anti-corruption sanctions regime is now in place

At a Glance…
On 26 April 2021, UK Foreign Secretary Dominic Raab announced the country’s first sanctions under the new Global Anti-Corruption Sanctions Regulations 2021 (the Regulations). The Regulations build on the sanctions imposed under the Global Human Rights Sanctions Regulations 2020 as the UK seeks to expand its post-Brexit autonomous sanctions regime.

Authors: Leigh T. Hansson, Alexander Brandt, Eli Rymland-Kelly, Will Young, Claire E. Don, Athina A. Douni, and Ozra O. Ajizadeh

Capabilities: International Trade & National Security; Regulatory & Investigations; Shipping

Read time approx: 3 minutes (487 words)

The sanctions under the new Regulations target 22 individuals allegedly involved in serious corruption in Russia, South Africa, South Sudan, and Latin America. Specifically, sanctions were imposed on the following:

  • Fourteen Russian individuals involved in the diversion, through a fraudulent tax refund scheme, of Russian state property worth $230 million – one of the largest tax frauds in recent Russian history – uncovered by the lawyer Sergei Magnitsky;
  • The Gupta brothers and their associate Salim Essa were accused of corruption in South Africa, which contributed to the downfall of the country’s former President Jacob Zuma;
  • Sudanese businessman Ashraf Seed Ahmed Hussein Ali for the misappropriation of significant amounts of state assets in Sudan; and
  • Three individuals accused of serious corruption in Honduras, Nicaragua, and Guatemala, including facilitating bribes to support a major drug trafficking cartel.

The Regulations have replaced the Misappropriation (Sanctions) (EU Exit) Regulations 2020 concerning the misappropriation of State funds from any country outside the UK and are based on the UN Convention against Corruption. The new Regulations allow the UK government to take a targeted approach to combatting serious corruption by imposing sanctions on individuals engaged in activities related to corruption and their enablers (that is, ‘involved persons’), preventing them from entering and channelling money through the UK.

A policy paper published on 26 April 2021, issued by the UK’s Foreign, Commonwealth & Development Office, identifies some of the factors that the UK government will consider when deciding whom to designate under the Regulations, including:

  • The UK government’s anti-corruption policy priorities;
  • The scale, nature, and impact of the serious corruption, including consideration of whether the conduct is systemic, systematic, or sophisticated, and the financial value of bribes;
  • The status, connections, and activities of the ‘involved person’;
  • Collective international action;
  • Interaction with law enforcement activities; and
  • The risk of reprisals or mental harm to journalists, civil society organisations, human rights defenders, or whistleblowers.

This action follows the Biden administration’s use of Executive Order 13818 and the Global Magnitsky Human Rights Accountability Act (as part of the U.S. Global Magnitsky Sanctions program), which allow for the sanctioning of persons involved in human rights abuses and corruption around the world. U.S. Treasury Secretary Janet Yellen also welcomed the UK’s new regime under the Regulations in her statement, noting that it compares to the U.S. Global Magnitsky Sanctions program and Canada’s Justice for Victims of Corrupt Foreign Officials Act.

As Dominic Raab’s announcement indicated that more designations for serious corruption are expected to follow, those operating with a UK nexus should continue to keep an eye on developments and perform due diligence checks to ensure compliance with the new Regulations.

If you have questions or would like additional information on the material covered in this Alert, please contact one of the authors – listed below – or the Reed Smith lawyer with whom you regularly work. 
 
 Leigh T. Hansson  Leigh T. Hansson
Partner, London & Washington, D.C.
L: +44 (0)20 3116 3394
D.C.: +1 202 414 9394
lhansson@reedsmith.com
 Alexander Brandt  Alexander Brandt
Associate, London
+44 (0)20 3116 3733
abrandt@reedsmith.com
 
 
 Eli Rymland-Kelly  Eli Rymland-Kelly
Associate, London & Washington, D.C.
L: +44 (0)20 3116 3287
D.C.: +1 202 414 9287
erymland-kelly@reedsmith.com
 William Young  Will Young
Associate, London
+44 (0)20 3116 3766
wyoung@reedsmith.com
 
 
 Claire E. Don  Claire E. Don
Associate, London
+44 (0)20 3116 3827
cdon@reedsmith.com
 Athina A. Douni  Athina A. Douni
Associate, London
+44 (0)20 3116 3653
adouni@reedsmith.com
 
 
 Ozra O. Ajizadeh  Ozra O. Ajizadeh
Associate, Washington, D.C.
+1 202 414 9191
oajizadeh@reedsmith.com

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