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PART 3U.K.Finance

CHAPTER 2U.K.Other financial and investment restrictions

Dealing with transferable securities or money-market instrumentsU.K.

16.—(1) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (2) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(2) A transferable security or money-market instrument falls within this paragraph if it has a maturity exceeding 30 days and is issued after 1 August 2014 by—

(a)a person mentioned in any of paragraphs 1 to 5 of Schedule 2;

(b)a person, other than an individual, which is—

(i)incorporated or constituted under the law of a non-UK country, and

(ii)owned by a person within sub-paragraph (a); or

(c)a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (a) or sub-paragraph (b).

(3) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4) A transferable security or money-market instrument falls within this paragraph if it has a maturity exceeding 30 days and is issued after 12 September 2014 by—

(a)a person mentioned in any of paragraphs 6 to 11 of Schedule 2;

(b)a person, other than an individual, which is—

(i)incorporated or constituted under the law of a non-UK country, and

(ii)owned by a person within sub-paragraph (a); or

(c)a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (a) or sub-paragraph (b).

[F1(4A) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4B) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4B) A transferable security or money-market instrument falls within this paragraph if it has a maturity exceeding 30 days and is issued on or after 1st March 2022 by—

(a)a person, other than an individual, which is—

(i)incorporated or constituted under the law of any part of the United Kingdom, and

(ii)owned by a person falling within Schedule 2; or

(b)a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (a).

(4C) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4D) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4D) A transferable security or money-market instrument falls within this paragraph if it is issued on or after 1st March 2022 by—

(a)a person connected with Russia, which is not—

(i)a person falling within Schedule 2,

(ii)a person, other than an individual, which on 1st March 2022 is domiciled in a country other than Russia, or

(iii)a person, other than an individual, which on 1st March 2022 is a branch or subsidiary, wherever located, of a person mentioned in paragraph (ii);

(b)a person, other than an individual, which is owned by a person falling within sub-paragraph (a); or

(c)a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (a) or sub-paragraph (b).

(4E) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4F) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4F) A transferable security or money-market instrument falls within this paragraph if it is issued on or after 1st March 2022 by, or on behalf of, the Government of Russia.]

[F2(4G) A person (“P”) must not, directly or indirectly, deal with a transferable security or money-market instrument falling within paragraph (4H) if P knows, or has reasonable cause to suspect, that P is dealing with such a transferable security or money-market instrument.

(4H) A transferable security or money-market instrument falls within this paragraph if it is issued—

(a)on or after 16th December 2022,

(b)by a person, other than an individual, which is not a person connected with Russia, and

(c)for the purposes of an activity mentioned in regulation 18B(2).]

[F3(5) Paragraphs (1), (3), (4A), (4C) [F4, (4E) and (4G)] are subject to Part 7 (Exceptions and licences).]

(6) A person who contravenes a prohibition in paragraph [F5(1), (3), (4A), (4C) [F6, (4E) or (4G)]] commits an offence.

(7) For the purposes of this regulation, and regulations 17 (loans and credit arrangements) [F7, 59 (exceptions relating to loans and credit arrangements) and 60ZZA (exceptions relating to investments in relation to Russia)], a person (“C”) is “owned” by another person (“P”) if P—

(a)holds directly or indirectly more than 50% of the shares in C, or

(b)holds directly or indirectly more than 50% of the voting rights in C.

(8) Schedule 1 applies for the purpose of interpreting paragraph (7).

(9) For the purposes of this regulation, a reference to “dealing with” a transferable security or money-market instrument includes a reference to purchasing or selling the security or instrument, providing investment services relating to the security or instrument or assisting in the issuance of the security or instrument.

(10) In this regulation—

“investment services” means—

(a)

the reception and transmission of orders in relation to one or more financial instruments,

(b)

the execution of orders on behalf of clients,

(c)

dealing on own account,

(d)

portfolio management,

(e)

the provision of investment advice,

(f)

the underwriting of financial instruments or placing of financial instruments on a firm commitment basis,

(g)

the placing of financial instruments without a firm commitment basis, or

(h)

any service in relation to the admission to trading on a regulated market or trading on a multilateral trading facility;

“money-market instrument” means an instrument of a kind normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers, excluding instruments of payment;

“non-UK country” means a country that is not the United Kingdom;

“transferable security” means a security, negotiable on the capital market, of any of the following kinds, but excluding instruments of payment—

(a)

shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares;

(b)

bonds or other forms of securitised debt, including depositary receipts in respect of such securities;

(c)

any other securities giving the right to purchase or sell any security of a kind mentioned in paragraph (a) or (b).

Textual Amendments

Commencement Information

I1Reg. 16 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Loans and credit arrangementsU.K.

17.—(1) A person (“P”) must not directly or indirectly grant a relevant loan if P knows, or has reasonable cause to suspect, that P is granting a relevant loan.

(2) A person must not directly or indirectly enter into any arrangement to grant a relevant loan if the person knows, or has reasonable cause to suspect, that the arrangement relates to a relevant loan.

[F8(2A) A person must not make funds or economic resources available to a relevant entity (“E”) where the purposes of making those funds or economic resources available is to enable E to grant a relevant loan on or after 16th December 2022.]

(3) Paragraphs (1) [F9, (2) and (2A)] are subject to [F10Part 7 (Exceptions and licences)].

(4) A person who contravenes a prohibition in paragraph (1) [F11, (2) or (2A)] commits an offence.

(5) In this regulation—

F12...

[F13“category 1 loan” means a loan or credit—

(a)

with a maturity exceeding 30 days,

(b)

made or granted to—

(i)

a person falling within Schedule 2,

(ii)

a person, other than an individual, which is—

(aa)

incorporated or constituted under the law of a non-UK country, and

(bb)

owned F14... by a person within paragraph (i), or

(iii)

a person, other than an individual, acting on behalf or at the direction of a person within paragraph (i) or paragraph (ii), and

(c)

which is first made or granted at any time after IP completion day;

“category 2 loan” means a loan or credit—

(a)

with a maturity exceeding 30 days,

(b)

made or granted to a person, other than an individual, which is—

(i)

incorporated or constituted under the law of any part of the United Kingdom, and

(ii)

owned F15... by a person falling within Schedule 2, and

(c)

which is first made or granted at any time on or after 1st March 2022;

“category 3 loan” means a loan or credit—

(a)

with a maturity exceeding 30 days,

(b)

made or granted to a person, other than an individual, which is—

(i)

connected with Russia,

(ii)

owned F16... by a person within sub-paragraph (i), or

(iii)

a person, other than an individual, acting on behalf or at the direction of a person within paragraph (i) or paragraph (ii),

(c)

[F17which is first made or granted at any time on or after 1st March 2022 but before [F1829th October 2022], and,]

(d)

which is not—

(i)

a category 1 loan, a category 2 loan or a category 4 loan, or

(ii)

a loan made or granted to—

(aa)

a person, other than an individual, which on 1st March 2022 is domiciled in a country other than Russia,

(bb)

a person, other than an individual, which is owned by a person falling within sub-paragraph (aa), or

(cc)

a person, other than an individual, acting on behalf or at the direction of a person within sub-paragraph (aa) or sub-paragraph (bb);

“category 4 loan” means a loan or credit—

(a)

made or granted to the Government of Russia,

(b)

which is first made or granted at any time on or after 1st March 2022;]

[F19“category 5 loan” means a loan or credit—

(a)

with a maturity exceeding 30 days,

(b)

made or granted to a person, other than an individual—

(i)

which is connected with Russia, other than—

(aa)

a person which on [F2029th October 2022] is incorporated or constituted in a country other than Russia, or

(bb)

a person which is owned by a person falling within paragraph (aa),

(ii)

a person which is owned by a person within sub-paragraph (i), or

(iii)

a person which is owned by a person connected with Russia who is an individual,

(c)

which is first made or granted at any time on or after [F2029th October 2022], and

(d)

which is not a category 1 loan, a category 2 loan, a category 3 loan or a category 4 loan.]

[F21“category 6 loan” means a loan or credit—

(a)

made or granted to a relevant entity,

(b)

which is for the purposes of an activity mentioned in regulation 18B(2),

(c)

which is first made or granted at any time on or after 16th December 2022, and

(d)

which is not a category 1 loan, a category 2 loan, a category 3 loan, a category 4 loan or a category 5 loan;]

“non-UK country” means a country that is not the United Kingdom;

[F22“owned” means owned within the meaning of regulation 16(7);]

[F23“relevant entity” has the meaning given in regulation 18B(8);]

[F24“relevant loan” means a category 1 loan, a category 2 loan, a category 3 loan [F25, a category 4 loan [F26, a category 5 loan or a category 6 loan]];]

F27...

Textual Amendments

Commencement Information

I2Reg. 17 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

[F28Correspondent banking relationships [F29and processing payments] U.K.

17A.—(1) A UK credit or financial institution (“C”) (“the correspondent”) must not establish or continue a correspondent banking relationship with the following (“the respondent”)—

(a)a designated person (“D”),

(b)a UK credit or financial institution, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by D, or

(c)a non-UK credit or financial institution, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by D,

if C knows, or has reasonable cause to suspect, that the correspondent banking relationship is with a designated person.

(2) C must not process a F30... payment to, from or via –

(a)D,

(b)a UK credit or financial institution, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by D, or

(c)a non-UK credit or financial institution, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by D,

if C knows, or has reasonable cause to suspect, that the F30... payment is to, from or via such a person.

(3) Paragraphs (1) and (2) are subject to Part 7 (Exceptions and licences).

(4) A person who contravenes a prohibition in paragraph (1) or (2) commits an offence.

[F31(5) For the purposes of this regulation, a reference to “processing” a payment—

(a)includes the clearing and settlement of a payment; but

(b)does not include the act of crediting a payment, for the first time, to C where that payment is credited to an account which is—

(i)in the name of C; and

(ii)not held on behalf of, or for the benefit of, a customer of C.]

(6) In this regulation—

“correspondent banking relationship” means the provision of banking services by a correspondent to a respondent including providing a current or other liability account and related services, such as cash management, international funds transfers, cheque clearing, providing customers of the respondent with direct access to accounts with the correspondent (and vice versa) and providing foreign exchange services;

“designated person” means a person who is designated under regulation 5 (power to designate persons) for the purposes of this regulation;

“non-UK credit or financial institution” means—

(a)

a person, other than an individual, which would satisfy the threshold conditions for permission under Part 4A of the Financial Services and Markets Act 2000 if it had its registered office (or if it does not have one, its head office) in the United Kingdom, or

(b)

an undertaking, other than a UK credit or financial institution, which by way of business—

(i)

operates a currency exchange office,

(ii)

transmits money (or any representation of monetary value) by any means, or

(iii)

cashes cheques that are made payable to customers;

“UK credit or financial institution” means—

(a)

a person that has permission under Part 4A of the Financial Services and Markets Act 2000 (permission to carry on regulated activities), or

(b)

an undertaking domiciled in the United Kingdom which by way of business—

(i)

operates a currency exchange office,

(ii)

transmits money (or any representation of monetary value) by any means, or

(iii)

cashes cheques that are made payable to customers.]

Textual Amendments

Investments in relation to [F32non-government controlled Ukrainian territory] U.K.

18.—(1) A person (“P”) must not carry on an activity mentioned in paragraph (2) if P knows, or has reasonable cause to suspect, that P is carrying on such an activity.

(2) The activities in this paragraph are—

(a)directly or indirectly acquiring or extending a participation, or acquiring any ownership interest, in land located in [F33non-government controlled Ukrainian territory];

(b)directly or indirectly acquiring or extending a participation, or acquiring any ownership interest in or control over, a relevant entity;

(c)directly or indirectly granting any loan or credit, entering into any arrangement to grant any loan or credit, or otherwise providing funds, including for example equity capital—

(i)to a relevant entity, or

(ii)for the documented purpose of financing any such entity;

(d)directly or indirectly establishing any joint venture—

(i)in [F33non-government controlled Ukrainian territory], or

(ii)with a relevant entity;

(e)providing investment services directly related to an activity referred to in sub-paragraphs (a) to (d) above.

(3) Paragraph (1) is subject to Part 7 (Exceptions and licences).

(4) A person who contravenes a prohibition in paragraph (1) commits an offence.

(5) In this regulation—

“investment services” has the same meaning as it has in regulation 16;

“relevant entity” means a person, other than an individual, which has a place of business located in [F34non-government controlled Ukrainian territory].

Textual Amendments

Commencement Information

I3Reg. 18 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

[F35Provision of financial services relating to foreign exchange reserve and asset managementU.K.

18A.—(1) A person (“P”) must not provide financial services to a person mentioned in paragraph (2) where—

(a)the financial services are for the purpose of foreign exchange reserve and asset management; and

(b)P knows, or has reasonable cause to suspect, that the financial services are provided to such a person.

(2) The persons mentioned in this paragraph are—

(a)the Central Bank of the Russian Federation,

(b)the National Wealth Fund of the Russian Federation,

(c)the Ministry of Finance of the Russian Federation,

(d)a person owned or controlled directly or indirectly (within the meaning of regulation 7) by a person mentioned in sub-paragraphs (a) to (c), or

(e)a person acting on behalf of or at the direction of a person mentioned in sub-paragraphs (a) to (c).

(3) Paragraph (1) is subject to Part 7 (Exceptions and licences).

(4) A person who contravenes the prohibition in paragraph (1) commits an offence.]

Textual Amendments

[F36Investments in relation to RussiaU.K.

18B.—(1) A person (“P”) must not carry on an activity mentioned in paragraph (2) if P knows, or has reasonable cause to suspect, that P is carrying on such an activity.

(2) The activities in this paragraph are—

(a)directly acquiring any ownership interest in land located in Russia;

(b)indirectly acquiring any ownership interest in land located in Russia for the purpose mentioned in paragraph (3);

(c)directly acquiring any ownership interest in or control over a person, other than an individual, connected with Russia;

(d)indirectly acquiring any ownership interest in or control over a person, other than an individual, connected with Russia for the purpose mentioned in paragraph (3);

(e)directly or indirectly acquiring any ownership interest in or control over a relevant entity for the purpose mentioned in paragraph (3);

(f)directly or indirectly establishing any joint venture with a person connected with Russia;

(g)opening a representative office or establishing a branch or subsidiary located in Russia; or

(h)providing investment services directly related to an activity referred to in sub-paragraphs (a) to (g).

(3) The purpose mentioned in paragraph 2(b), (d) and (e) above is making funds or economic resources available—

(a)directly or indirectly to a person connected with Russia; or

(b)for the benefit of a person connected with Russia.

(4) For the purposes of paragraph (3)—

(a)economic resources are made available to a person connected with Russia only if that person would be likely to exchange the economic resources for, or use them in exchange for, funds, goods or services;

(b)making funds or economic resources indirectly available to a person connected with Russia includes, in particular, a reference to making them available to a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by a person connected with Russia; and

(c)funds or economic resources are made available for the benefit of a person connected with Russia only if that person thereby obtains, or is able to obtain, a significant financial benefit, and “financial benefit” includes the discharge (or partial discharge) of a financial obligation for which the person connected with Russia is wholly or partly responsible.

(5) Paragraph (1) is subject to Part 7 (Exceptions and licences).

(6) A person who contravenes a prohibition in paragraph (1) commits an offence.

(7) In this regulation, the reference to a person (“P”) directly or indirectly acquiring any ownership interest in or control over a person or entity means—

(a)P directly or indirectly acquiring any share in the person or entity;

(b)P directly or indirectly acquiring any voting rights in the person or entity;

(c)P directly or indirectly acquiring any right to appoint or remove a majority of the board of directors of the person or entity; or

(d)P directly or indirectly acquiring any means of ensuring that the affairs of the person or entity are conducted in accordance with the wishes of P where it is reasonable, having regard to all of the circumstances, to expect that P would (if P chose to) in most cases or significant respects, by whatever means, be able to do so.

(8) In this regulation—

“branch” means, in relation to a person other than an individual, a place of business which forms a legally dependent part of that person and which carries out all or some of the transactions inherent in the business of that person;

“investment services” has the same meaning as it has in regulation 16 (dealing with transferable securities or money-market instruments);

“relevant entity” means a person, other than an individual, which F37... is not a person connected with Russia.]

Textual Amendments

[F38Trust servicesU.K.

18C.—(1) A person must not provide trust services to or for the benefit of a designated person.

(2) A person (“P”) must not provide trust services to or for the benefit of a person connected with Russia (“C”) unless pursuant to an ongoing arrangement pursuant to which P provided those trust services to or for the benefit of C immediately before 16th December 2022.

(3) Paragraphs (1) and (2) are subject to Part 7 (Exceptions and licences).

(4) A person who contravenes a prohibition in paragraph (1) or (2) commits an offence.

(5) For the purposes of paragraphs (1) and (2), trust services are provided for the benefit of a person (“B”) where—

(a)B is a beneficiary of a trust or similar arrangement,

(b)B is referred to as a potential beneficiary in a document from the settlor relating to a trust or similar arrangement (such as a letter of wishes), or

(c)having regard to all the circumstances, B might reasonably be expected to obtain, or to be able to obtain, a significant financial benefit from the trust or similar arrangement.

(6) For the purpose of paragraph (5), “beneficiary”, “potential beneficiary” and “settlor”, in relation to an arrangement similar to a trust, means those persons who hold equivalent or similar positions to those described in sub-paragraphs (a) to (c) of that paragraph in respect of a trust.

(7) In this regulation—

“designated person” means a person who is designated under regulation 5 (power to designate persons) for the purposes of this regulation;

“trust services” means—

(a)

the creation of a trust or similar arrangement,

(b)

the provision of a registered office, business address, correspondence address or administrative address for a trust or similar arrangement,

(c)

the operation or management of a trust or similar arrangement, or

(d)

acting or arranging for another person to act as trustee of a trust or similar arrangement, where “trustee”, in relation to an arrangement similar to a trust, means a person who holds an equivalent or similar position to a trustee of a trust.]

Textual Amendments