Government announces £1m fine for breach of Russia sanctions

Wed 23 Aug 2023
Posted by: Phillip Adnett
Trade News

Sanction below flags: US, Russia and EU

The government has reached a £1m settlement with business it found to have breached sanctions imposed on Russia, it announced yesterday (22 August).

In a Notice to Exporters (NTE), the government said an unnamed UK company had been fined in relation to the unlicensed trade of goods. The penalties related to breaches of the Russian (Sanctions) (EU Exit) Regulations 2019.

This is the second time this year the government has announced penalties for non-compliance with export controls, with HMRC having unveiled over £3m in fines in February 2023.

Compliance reminder

Roger Arthey, the chair of the Institute of Export & International Trade’s (IOE&IT) Export Control Profession Board, said the penalty was a reminder of the need for continuous due diligence and compliance.

“Traders should note that failure to comply with control regulations and the general sanctions regime of the UK, or any other authority, can result in expensive penalties. We would advise all exporters to be careful and avoid any deliberate or inadvertent non-compliance,” he told the IOE&IT Daily Update.

“The IOE&IT offers training and advice to help exporters understand how these rules apply to them and their business, as well as how to ensure compliance,” he added.

More information needed

Brinley Salzmann, director of overseas & exports of ADS Group and a member of the IOE&IT’s export controls special interest group (SIG), said that the release of additional details on these fines could help export control professionals with their own compliance.

“Many in the export control profession have been lobbying HMRC to follow the US government in publishing as much information as possible on penalties that have been imposed on companies. This would set an example for other firms’ compliance staff to use when examining their own compliance.

“We welcome the release of this information to encourage compliance and to demonstrate the strength of the UK authorities’ ongoing commitment to robustly enforce these regulations.”

IOE&IT support

The IOE&IT offers training and consultancy in export control compliance, with IOE&IT members able to benefit from discounted rates.

It will also be hosting the third of its (SIG) sessions for export control professionals on 31 October 2023.

Legal services

The Export Control Joint Unit also recently introduced an amendment to rules on the provision of legal services.

A new General Licence, issued earlier in August, permits lawyers to advise clients in relation to whether or not an action  complies with UK sanctions policy.

Previously, there was concern from the legal services industry that lawyers could not provide advice on whether a client’s proposed activity was subject to sanctions regimes outside the UK.

The Department of Business and Trade (DBT) acknowledged that this was unintended and promised to change the rule.

‘Sticking plaster’

A spokesperson from the Law Society of England and Wales welcomed the publication of the general licence and statutory guidance, but said more needed to be done:

“The Law Society has been working closely with government and a group of sanctions compliance experts to address the workability of the government’s sanctions on Russia accessing UK legal expertise.

“We welcome the publication of a General Licence and updated statutory guidance – but this is only a sticking plaster. Significant amendments are required to the original regulations to fully ensure sanctions compliance advice can be given and that legal professional privilege is protected.”