UK Adds Russia Sanctions Guidance on Securities Settlements, Trust Services
The U.K.’s Office of Financial Sanctions Implementation on Oct. 1 added two new frequently asked questions to provide guidance on how sanctions apply to Russia-related securities settlements and trust services.
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One new FAQ addresses how U.K. sanctions apply to settlements of Russian securities between two sub-accounts at the same non-sanctioned financial institution or central securities depository. OFSI said its sanctions normally don’t apply in this situation, and those settlements “can be undertaken without” a license as long as no sanctioned person is involved in the transaction; the transaction doesn’t involve the payment of any fee to a sanctioned person, “including instructions to another person to make such a payment;” and the Russian security involved in the transaction doesn’t “engage any other UK sanctions prohibitions.”
Another FAQ addresses the “lack of clarity” around the terms “located” and “ordinarily resident” in Russia under the U.K.’s trust services restrictions. Companies have told OFSI that this can lead to U.K. firms “applying different levels of due diligence in similar scenarios.” For example, some companies said they interpret “located in Russia” to mean “based in” rather than “literally in the physical location of Russia at a particular moment in time,” the FAQ said.
In its answer, OFSI said companies should “consider the individual circumstances of a case which may show, for example, that one or more aspect” of its sanctions regulations “is relevant and you should satisfy yourself that appropriate due diligence has been conducted.” It also pointed to its sanctions guidance involving Russia-related business services and a 2023 blog post on its trust services sanctions, which said its definition of people “connected with Russia” doesn’t “normally apply to individuals who only occasionally travel to Russia while normally being resident or located in the UK. The definition also does not include Russian nationals who are not ordinarily resident or located in Russia.”
OFSI added that it “does not generally provide legal advice and any views are not determinative of questions of law, and if in any doubt, for example, where complex or unclear circumstances exist, you should seek independent legal advice in relation to the matters.”