UK targets gold and oil traders in latest batch of Russian sanctions

Thu 9 Nov 2023
Posted by: Phillip Adnett
Trade News

Russia and UK flags

The UK government has today (9 November) unveiled new sanctions against 29 individuals and organisations that work in Russia’s oil, gold and strategic sectors.

The new measures target both Russian oligarchs and businesses, as well as ‘enablers’ in third countries that purportedly help Russia’s war effort.

A network based in the United Arab Emirates, which the government believes is helping Moscow avoid sanctions, is being hit, as are several mining and refining companies.

‘Opaque structures’

Foreign secretary James Cleverly said:

“Today’s sanctions will hit those who have provided succour to Putin by helping him to lessen the impact of our sanctions on Russian gold and oil – 2 critical sources of revenue for the Russian war machine.”

Paramount Energy & Commodities DMCC, a spin-off of Swiss-based oil company Paramount Energy & Commodities SA, was one of those sanctioned, with the UK government claiming that it is “known to employ opaque ownership structures and has been used by Russia to soften the blow of oil-related sanctions imposed by the UK in coordination with G7 partners”.

According to the FT, Paramount SA’s founder, Niels Troost told Swiss authorities that the spin-off company, which is based on Dubai, is legally separate from the parent company.

Oil

In a press release, the foreign office claims that the oil price cap has reduced Russian oil revenues by 25% between January-September 2023 when compared to the same period in 2022.

The price cap was imposed by the G7 and allied nations in December 2022 and limits how much can be paid for Russian energy.

The foreign office has warned that revenue from oil and gold markets play a critical role in supporting Russia’s war efforts.

Gold warning

Two of Moscow’s biggest gold producers, Nord Gold and Highland Gold Mining, have been sanctioned.

The National Crime Agency (NCA), the UK’s top law enforcement agency, issued a warning that Russia is using the trade in gold to evade sanctions.

According to the NCA, gold exported from Russia since 21 July 2022 is increasingly being shipped to countries that do not apply sanctions on Russia. There, the gold is melted down and cannot be easily identified.

Adrian Searle, director of the National Economic Crime Centre at NCA, said:

“London’s precious metals market sets the global standard for the quality of gold. The sector plays a key role in supervising the trade and improving record keeping to boost the integrity of the supply chain.”

Red alert

A Red Alert has been sent to regulated industries, including banks, lawyers and high value dealers.

The news comes just days after a freedom of information request by law firm Pinsent Masons found that over 100 UK companies had admitted they had breached Russian sanctions.

As reported by the IOE&IT Daily Update, the Office of Financial Sanctions Implementation (OFSI), a specialised agency of the Treasury that monitors and enforces the UK’s sanctions regime, revealed that 127 businesses had disclosed they had breached sanctions law.