Belgravia Law Newsletter - September 2024

This blog post provides an overview of the legal framework governing the enforcement of sanctions in the UK. It outlines the basis for liability regarding breaches of financial and trade sanctions and examines the potential penalties that may arise.

In summary, two regulatory frameworks are in place: civil and criminal. The civil framework imposes monetary penalties for violations of financial sanctions and compound penalties for breaches of trade sanctions. Conversely, the criminal framework establishes liability for breaches of sanctions, circumvention of trade sanctions, and violations of export controls, with potential punishments including imprisonment and fines.

Financial Sanctions

UK financial sanctions can be imposed under the Regulations enacted by the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). According to subsection (1)(a) of SAMLA, the Secretary of State has the authority to impose an asset freeze on designated individuals. An asset freeze is a broad prohibition on any dealings involving the funds or economic resources owned or controlled by the designated individual. The terms "funds," "economic resources," and "freeze" are defined in Section 60 of SAMLA.

An asset freeze and certain financial service restrictions extend to entities that are directly or indirectly owned or controlled by a designated person. These entities may not be designated themselves, nor will they appear on the government’s consolidated list of asset freeze targets; however, they remain subject to financial sanctions. The Office of Financial Sanctions Implementation (OFSI) provides general guidance that details the circumstances under which an entity is considered to be owned or controlled by another person.

Prohibitions

Sanctions Regulations generally outline a series of prohibitions, such as asset freezes, along with positive obligations for specific parties, such as reporting requirements for those identified as "relevant firms".

All UK persons, which includes entities incorporated in the UK, are subject to UK sanctions obligations regardless of their location (SAMLA s.21). Consequently, they may be held liable for sanctions violations committed outside the UK.

Non-UK persons are also subject to UK sanctions concerning actions taken within the UK and the Isle of Man. Under English criminal law, a person can be liable for a criminal offense—even when outside the UK—if their conduct is intended to have effects within the UK, as established in Office of the King's Prosecutor, Brussels v Cando Armas (HL) [2006] 2 A.C. 1. Thus, UK authorities may pursue prosecution and extradition of non-UK individuals for such conduct, even if it occurred outside the UK.

It is important to note that the prohibitions established by financial sanctions are subject to exceptions and a licensing regime, which allows the Treasury, through OFSI, to grant licenses for actions that would otherwise breach sanctions.

We are pleased to announce that Benjamin Wells, Chair of the Eurasian Legal Professionals Forum, is visiting Bishkek from 29 September to 4 October 2024. His visit is part of an assignment commissioned by the Westminster Foundation for Democracy, focusing on legal and economic reforms in UK-Kyrgyz relations.

Additionally, we invite you to our Networking Reception hosted by the British Embassy in Bishkek. This exclusive event offers a relaxed and informal setting for professional engagement and is an excellent opportunity to connect with fellow legal professionals.

Join us for a unique platform to discuss key topics, exchange ideas, and build valuable connections in a sophisticated environment. This is an ideal occasion to expand your network and explore new avenues for collaboration.

Date: Friday, 4 October 2024
Location: Novotel

We look forward to sharing an evening of productive interactions and professional development with you.

We are delighted to announce that Ceyda Ilgen, LLM, is attending Istanbul Arbitration Week (ISTAW) 2024 from 30 September to 4 October at the Mandarin Oriental Bosphorus Hotel in Istanbul.

ISTAW is an excellent opportunity for legal professionals and arbitrators globally, offering a platform for discussions on arbitration trends, best practices, and the future of dispute resolution through insightful panels, workshops, and networking opportunities.

We anticipate the valuable insights and connections Ceyda will bring back from this event. If you are attending ISTAW, we would love to meet with you to discuss the latest developments. Please feel free to reach out to arrange a convenient time to connect.

Message us to explore potential opportunities for collaboration.

Introduction

In this episode of the Beyond Law Series, we delve into the essential intersection of human rights and corporate responsibility. As businesses operate within a globalized economy, the impact of their decisions on human rights has become increasingly significant. This episode aims to explore how companies can align their operations with international human rights standards and the legal frameworks that govern corporate accountability.

Understanding Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) refers to a company's commitment to conducting business in an ethical manner, taking into account its impact on society, the environment, and the economy. In the context of human rights, CSR encompasses a company’s obligation to respect and promote human rights throughout its operations, supply chains, and stakeholder interactions.

The Legal Framework

Numerous international legal instruments and guidelines establish the standards for corporate responsibility regarding human rights. Key documents include:

• The UN Guiding Principles on Business and Human Rights (UNGPs): These principles provide a global standard for preventing and addressing the risk of adverse human rights impacts linked to business activity. They outline the responsibility of businesses to respect human rights and the need for states to protect these rights.

• The OECD Guidelines for Multinational Enterprises: These guidelines encourage businesses to conduct their operations in a manner consistent with human rights, providing a framework for ethical behavior.

• National Legislation: Various countries have enacted laws that hold businesses accountable for human rights violations. Examples include the UK Modern Slavery Act and France’s Duty of Vigilance Law, which require companies to disclose their efforts to combat human rights abuses within their operations and supply chains.

Integrating Human Rights into Business Practices

To effectively integrate human rights into their operations, businesses should consider the following strategies:

• Conducting Human Rights Due Diligence: Companies should undertake thorough assessments to identify and mitigate human rights risks associated with their activities. This process includes engaging stakeholders, such as employees, local communities, and civil society organizations.

• Establishing Clear Policies: Developing comprehensive human rights policies that align with international standards is crucial. These policies should articulate the company’s commitment to respecting human rights and outline procedures for addressing any violations.

• Training and Awareness: Educating employees and stakeholders about human rights issues and the company’s policies is essential for fostering a culture of accountability and respect.

• Monitoring and Reporting: Regularly monitoring human rights practices and transparently reporting on progress is vital for accountability. Companies should provide stakeholders with information on their human rights impacts and the measures taken to address them.

Conclusion

As we conclude this episode of the Beyond Law Series, we emphasize the importance of corporate responsibility in promoting human rights. Businesses have a crucial role to play in safeguarding the rights of individuals and communities impacted by their operations. By adopting robust human rights practices, companies can contribute to a more just and equitable society while mitigating legal risks and enhancing their reputation in the marketplace.