Explanatory note

These Regulations are made under the Sanctions and Anti-Money Laundering Act 2018 (c. 13) (“the Act”) to amend the Russia (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/855) (“the 2019 Regulations”) (as amended).

Under section 1 of the Act, the Secretary of State may make sanctions regulations for a purpose within subsection (2). In addition to the current purpose stated in regulation 4 (encouraging Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine), the Secretary of State considers that the 2019 Regulations are also appropriate for promoting the payment of compensation by Russia for losses suffered by Ukraine as a result of Russia’s full-scale invasion of Ukraine on or after 24 February 2022. Regulation 4 of the 2019 Regulations is amended to refer to this additional purpose.

Regulation 3 removes the existing definition of non-government controlled areas of the Donetsk and Luhansk oblasts, and substitutes a new definition of non-government controlled Ukrainian territory which includes also the additional territory of non-government controlled areas of the Kherson and Zaporizhzhia oblasts of Ukraine.

The expanded definition has the effect of extending existing finance, shipping and trade sanctions relating to the Autonomous Republic of Crimea and city of Sevastopol (“Crimea”) and non-government controlled areas of the Donetsk and Luhansk oblasts, and relevant exceptions, to non-government controlled areas of the Kherson and Zaporizhzhia oblasts.

The Regulations also introduce a defence to the strict liability offence under section 68(1) of the Customs and Excise Management Act 1979 relating to the prohibition on exportation of certain goods to, or for use in, non-government controlled areas of the Donetsk, Kherson, Luhansk and Zaporizhzhia oblasts.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen. Instead a de minimis assessment has been prepared as this instrument is likely to entail some costs for businesses, but the net impact is estimated to be below £5 million per year.