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Ukraine crisis: financial and international trade sanctions

The UK has joined the US and EU in imposing unprecedented sanctions on Russia in response to its full-scale invasion of Ukraine.

Russia's President Vladimir Putin

The UK has joined the US and EU in imposing unprecedented sanctions on Russia in response to its full-scale invasion of Ukraine. This has included measures against its central bank and financial sector, and targeted asset freezes of individuals and companies.

What are sanctions?

Sanctions are a coercive foreign policy and security tool. They can be imposed by the UK government on individuals, non-state organisations, companies and countries. They are intended to constrain or deter certain actions, to force a change in behaviour, or send a political message to other persons, organisations and countries. For example, in 2014, following the outbreak of the conflict in Ukraine, the UK imposed a sanctions regime on individuals and entities aimed at encouraging Russia to cease actions “undermining or threatening the territorial integrity, sovereignty or independence of Ukraine.”[1]

The UK can impose sanctions unilaterally or in coordination with other countries. As a permanent member of the UN security council, the UK plays a leading role in determining UN sanctions policy. Like all UN members, the UK is obliged under international law to implement all sanctions approved by the UN Security Council.

What types of sanctions are there?

UK law provides for the following types of sanctions:

  • Financial sanctions – these include asset freezes of designated persons; blocking access to financial services and capital markets for individuals, companies or whole sectors of a certain country’s economy (for example, restrictions on the issuance or trading of debt of some Russian state companies). It also prevents commercial transactions with designated individuals and companies.
  • Immigration sanctions – enable the UK government to refuse designated individuals leave to enter or remain in the UK.
  • Trade sanctions – allow the UK government to restrict the export or import of goods or technologies to or from target countries, or specific sectors or entities within those countries.
  • Shipping and aircraft sanctions – allow the UK government to control the movement of designated ships or aircraft, or ships and aircraft originating from a specified country.
  • Other sanctions required to comply with sanctions imposed by a resolution of the United Nations Security Council.

What new sanctions has the UK government imposed on Russia over Ukraine? 

On 26 February, the UK, along with the US and EU announced sanctions on Russia’s central bank, which will involve freezing its assets held in sterling, dollars or euros. They have also excluded Russia’s biggest banks from SWIFT, the messaging network that enables cross-border transactions. All Russian companies are restricted from accessing UK capital markets and trading in debt through the UK financial system.

The UK, US and EU have also blocked Russia’s largest banks, including Sberbank and VTB, from accessing western capital markets, correspondent banking, and sterling, dollar and euro clearing. Together, the sanctions on the central bank and Russia’s largest financial institutions will cause major disruption to Russia’s economy.

Other measures introduced by the UK include:

  • asset freezes on several hundred new Russian entities and individuals  
  • a ban on all Russian aircraft entering UK airspace
  • a ban on Russian ships entering UK ports
  • a ban on the export of dual-use goods and technology to Russia
  • limits on the amount Russian nationals can place in UK bank accounts 
  • additional sanctions on Belarus, for its role in the invasion of Ukraine
  • a ban on the import of a wide range of Russian goods, including iron, steel, fertilisers, wood, copper, beverages and cereals. 

Watch our explainer on the UK's sanctions on Russia

What sanctions has the UK previously imposed on Russia?  

In 2014 the UK, along with other EU countries, imposed wide-ranging sanctions in response to Russia’s annexation of Crimea and its military activity in parts of Eastern Ukraine. These include: 

  • asset freezes and travel bans on individuals and entities involved in, or associated with, persons destablising Ukraine and undermining its territorial integrity
  • restrictions on the export of military goods, military technology, and dual-use technology
  • restrictions on the trade in debt of major Russian state banks, energy companies, and arms manufacturers
  • restrictions on the export to Russia of certain goods and technology for use in the energy sector, particularly for off-shore drilling and exploration
  • a ban on imports originating in Crimea and a ban on infrastructure-related exports to Crimea.

What are the difficulties in using sanctions? 

Although legislation allows the UK to impose sanctions unilaterally, the UK government has stated that “international cooperation will remain at the heart of UK sanctions policy.”[2] It believes that sanctions are most effective when implemented and enforced collectively, as this limits the capacity of individuals, organisations and states to evade their impact (for example, by importing technology or seeking credit from third countries). However, achieving coordination and a unified approach has not always been easy. Between 2015 and 2021, some EU states have on several occasions called for a re-examination of the EU’s sanctions policy vis-à-vis Russia.[3]  

The effectiveness of sanctions as foreign policy tool is also disputed. Sanctions on individuals are based on the premise that inflicting losses on senior figures within the elite will encourage them to push for a change in state behaviour. Financial and trade sanctions on companies and economic sectors are intended to inflict economic losses on a state that will create pressure both within the elite and the broader population for a change in foreign policy. However, when there is no agreement within the UN Security Council on sanctions, some major countries may refuse to implement sanctions, blunting their effectiveness.  

In addition, as Richard Connolly has noted with reference to Russia, sanctions may in some cases strengthen rather than weaken elite support for the regime. While sanctions since have hit Russia’s economic growth, they have “have specific distributional effects in oligarchic regimes like Russia, and can serve to bolster the state and enrich politically important individuals and organisations.”[4]

How many UK sanctions regimes are there?

The UK currently operates 38 sanctions regimes relating to human rights abuses, corruption and money-laundering, non-proliferation, counter-terrorism, cybersecurity, and military conflict and military occupation.[5] As of the end of 2021, over 1,700 individuals and 500 entities were subject to UK sanctions regimes.[6] A full list is published by the government.[7]

What is the legal framework for imposing sanctions?

The UK government’s powers to implement sanctions are set out in the Sanctions and Anti-Money Laundering Act 2018.[8] This Act replaced the legislative framework that operated when the UK was an EU member.

When the UK was a member of the EU, sanctions were largely a matter of EU law. Sanctions were implemented through legislation made under the European Communities Act 1972, which was repealed when the UK left the EU. The Sanctions and Anti-Money Laundering Act set out to create “maximum continuity” for existing sanctions policy. The UK government created a series of regulations under this Act that allowed it to retain existing sanctions regimes after the UK left the EU.

The 2018 Sanctions Act also enables the UK to create regulations to implement new sanctions regimes independently of EU states.

The UK government can also implement sanctions through the Counter Terrorism Act 2008 and the Anti-Terrorism, Crime and Security Act 2001. The government can use powers under the Air Navigation Order 2016 to prevent airplanes not covered by a specific sanctions regime from flying in UK airspace.

How are sanctions introduced?

The 2018 Sanctions Act allows an “appropriate minister” to make sanctions regulations, which take the form of secondary legislation. These designate individuals or entities under a sanctions regime set out by the government. An “appropriate minister” is defined as a secretary of state (usually the secretary of state for foreign, commonwealth and development affairs) or a Treasury minister.

As of 15 March 2022, there are two procedures for designating individuals and entities.

Under the “standard procedure” set out in the original Sanctions Act, sanctions on individuals and entities are subject to an “appropriateness test”. The government can only designate an individual or entity under the Sanctions Act where the minister considers that this is appropriate, having regard to the purpose of the relevant sanctions regulations and their likely effects. The minister must certify that there are reasonable grounds that the designated individual or entity is involved in actions that are the subject of a UK sanctions regime (for example, involved in or supporting Russia’s invasion of Ukraine).

The Economic Crime (Transparency and Enforcement) Act, which became law on 15 March, made an amendment to the Sanctions Act, providing for a new “urgent procedure” for sanctioning individuals and entities. This removed the appropriateness test for designating individuals and entities. A minister may designate a person under the urgent procedure even when without showing reasonable grounds that they are an “involved person” in sanctionable activity if the individual or entity has been sanctioned by the United States, the EU, Australia or Canada or any other country specified by the minister.

The intention of the urgent procedure is to lower the evidentiary level required to impose sanctions so that they can be imposed faster. They also allow the UK to maintain close alignment between its sanctions regime and that of its allies.

In all cases when designating individuals or entities, the secretary of state must set out in a report to parliament the purpose of the sanctions. These include: to comply with UN or international treaty obligations; to prevent terrorism, to promote resolution of armed conflicts; to deter human rights abuses; or to promote compliance with international law. Under the standard procedure, the minister must inform a designated individual or entity of the sanctions as soon as is reasonably practicable. This does not apply when the urgent procedure is used.

The UK sanctions list includes a statement of reasons for sanctions on each designated individual and entity. For example, the statement of reasons for sanctions on Russia’s VTB Bank states that: “VTB Bank PJSC is owned by and/or associated with the Russian government and has received significant financial support from the Russian government. The Russian government is involved in activities to destabilise Ukraine and undermine or threaten the territorial integrity, sovereignty and independence of Ukraine.”   

Can the government make exemptions to sanctions for certain businesses or activities? 

Yes. The government can issue licences that provide exemptions to asset freezes and financial sanctions to enable certain businesses to continue to function. These licences are issued by the Treasury’s Office of Financial Sanctions Implementation. For example, when the UK government placed sanctions on Roman Abramovich on 10 March 2022, the Treasury issued a licence to Chelsea Football Club, which enables it to continue to operate until 31 May 2022.

What were the first sanctions introduced under the new framework?

The first new regulations made under the Act following Brexit were the Global Human Rights Sanctions Regulations, which came into force in July 2020. This instrument enables the UK government to freeze the assets of individuals, entities and organisations involved in serious human rights violations, and prevent the entry of individuals to the UK.[9] It is partly modelled on the US Global Magnitsky Act, which was named after a Russian tax adviser, Sergei Magnitsky, who died in detention in Moscow after making accusations of large-scale fraud by Russian officials.[10]

On 6 July 2020, the UK government used this instrument to impose travel bans and asset freezes on 49 individuals and organisations involved in serious human rights abuses.[8] This included officials accused of involvement in the killing of the Saudi Arabian journalist Jamal Khashoggi, and Russian officials alleged to have been involved in the mistreatment that led to the death of Sergei Magnitsky.

Does parliament need to approve sanctions regulations?

In most cases, new sanctions can come into force immediately, or at a date specified in the regulations.

Designations must be approved within 28 days of being laid in parliament by a vote of both houses of parliament, or they cease to have effect (this is known as the made-affirmative procedure).

Designations made under the urgent procedure can remain in place for 56 days without a statement of reasonable grounds for the sanctions, with the possibility of extending this by another 56 days. After this period, the minister must certify that they have reasonable grounds to suspect the designated individual or entity is an “involved person” in the sanctions regime.

What are the requirements for reviewing and reporting on sanctions?

The government has recently significantly reduced the reviewing and reporting requirements for sanctions.

The original Sanctions Act required the secretary of state for foreign, commonwealth and development to conduct a high-level political review of each sanctions regime to consider whether the regulations were still appropriate for their specified purpose. The government was required to present a report on its sanctions reviews to parliament each year.

At least every three years, the government was required to reassess the evidence used to designate the sanctioned individual or entity.

The Economic Crime Act 2022 removed all of these reporting requirements.

Who is responsible for sanctions policy?

Responsibility for negotiating, implementing and enforcing sanctions is shared across a number of government departments.

  • The Foreign, Commonwealth and Development Office is responsible for developing the UK’s international sanctions policy and negotiating all international sanctions with other countries (for example, UN sanctions).
  • The departments responsible for implementation of sanctions are:
  • The Office of Financial Sanctions Implementation within the Treasury
  • The Export Control Joint Unit in the Department for International Trade, which implements export and import bans
  • The Department of Transport, which implements sanctions relating to aircraft and ships in UK airspace and waters
  • The Home Office, which implements travel bans

Enforcement of sanctions and investigation of breaches are conducted by:

  • The National Crime Agency, which investigates and enforces financial sanctions such as asset freezes
  • HM Revenue and Customs, which enforces breaches of trade sanctions.

What are the penalties for breaching sanctions? 

The Sanctions and Anti-Money Laundering Act 2018 allows the government to create criminal offences for breaching sanctions regulations. These vary depending on the sanctions regime and the type of offence, but can include sentences of up to 10 years imprisonment. For example, a person who breaches financial sanctions on Russian individuals or entities in relation to the conflict in Ukraine may, on conviction on indictment, receive a prison sentence of up to seven years, or a fine or both. A person who breaches export or import restrictions relating to sanctions on Russia may receive a prison sentence of up to 10 years, or a fine, or both. 

Can sanctions be challenged?

A sanctioned person or entity can ask the government to revoke or amend sanctions regulations, if they believe they have been misidentified or that the decision was based on insufficient evidence.

If this application is unsuccessful, they can also challenge their designation in the courts. In this case, the courts apply the principles of judicial review, a kind of court case, in which someone challenges the lawfulness of a government decision.

  1. Foreign, Commonwealth and Development Office, UK sanctions relating to Russia, 15 April 2019,
  2. Foreign, Commonwealth and Development Office, Sanctions Regulations Report on Annual Reviews 2021 Annex: Annual Reviews, January 2022,
  3. Emmott R and Baczynska G, Italy, Hungary say no automatic renewal of Russia sanctions, Reuters, 14 March 2016,
  4. Connolly R, How harsher sanctions could help Putin turn Russia back into the Soviet Union, The Conversation, 23 July 2014,
  5. Foreign, Commonwealth and Development Office, UK sanctions regimes: Information on UK sanctions regimes currently in force, 31 January 2020,
  6. Foreign, Commonwealth and Development Office, Sanctions Regulations Report on Annual Reviews 2021 Annex: Annual Reviews, January 2022,
  7. Foreign, Commonwealth and Development Office, The UK Sanctions List, 6 July 2020,
  8. Sanctions and Anti-Money Laundering Act 2018,
  9. Explanatory Memorandum to the Global Human Rights Sanctions Regulations 2020, No. 680
  10. UK’s first post-Brexit sanctions (
  11. Ibid.
Country (international)
Johnson government
Institute for Government

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