The newly implemented measures were introduced under the Russia (Sanctions) (Overseas Territories) (Amendment) Order 2024 (the 2024 OT Order) and reflect changes made to the domestic UK-Russia sanctions regime under Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2023, which were initially introduced as a matter of UK law on 15 December 2023.

The new measures under the 2024 OT Order came into force on 14 March 2024.

New licensing grounds in detail: Relevant transfer to the Government of Russia or a Designated Person

The first divestment licensing ground (regulation 9DB(1)) provides a licensing application ground to “enable anything to be done by a [UKOT] entity in order to enable that entity to undertake a relevant transfer”. A “relevant transfer” is defined as “a transfer of funds or economic resources located in Russia and owned, held or controlled by the [UKOT] entity, to a person concerned in order to enable that entity to divest itself, either wholly or partially, of those funds or economic resources.” In addition to this, a “person concerned” is further defined as “the Government of Russia or, as the case may be, a designated person.” This licensing ground, therefore, may only be used to transfer assets held in Russia to the Government of Russia or a designated person.

New licensing grounds in detail: Relevant transfer to allow a UKOT entity to acquire interest in that UKOT entity, which is held by the Government of Russia or a Designated Person.

The second divestment licensing ground (regulation 9DB(3)) provides a licensing ground to “enable anything to be done by a [UKOT] entity in order to allow that entity to acquire from a person concerned an interest in that entity held by that person where:

• The sole consideration for that acquisition is a transfer of funds from the UKOT entity to the person concerned;
• Such funds are credited to – (i) a frozen account held by a relevant institution; or (ii) an account held by a non BVI credit or financial institution in a non-BVI country which has sanctions measures in place.”

These licensing grounds allow the UKOTs’ entities to apply for a specific licence, allowing them to:

• Engage in a "relevant transfer" by relocating funds or economic assets situated in Russia, owned by the entity, to divest itself either entirely or partially of said assets, directing them to either the Government of Russia or a designated person.
• Obtain ownership in the entity from a designated individual or the Government of Russia, with the exclusive payment being a transfer of funds credited to a frozen account in UKOTs or a jurisdiction similarly sanctioned.

Similar provisions in the new grounds also cover third parties in the UKOTs that may need to provide assistance related to the transactions anticipated above. This could cover service providers, professionals and managers, for example.

In practical terms, the new licensing grounds permit these entities to facilitate the dissociation of funds or resources located in Russia or, alternatively, the enabling of acquisitions under similar conditions.

The Russia (Sanctions) (Overseas Territories) (Amendment) Order 2024 can be found here.

Our blog post on Russia (Sanctions) (EU Exit) (Amendment) (No. 4) and (No. 5) Regulations 2023 can be accessed here.