The Russia (Sanctions) (EU Exit) (Amendment) (No. 17) Regulations 2022

Citation and commencement

1.—(1) These Regulations may be cited as the Russia (Sanctions) (EU Exit) (Amendment) (No. 17) Regulations 2022.

(2) These Regulations come into force—

(a) for the purposes of Part 2 of Schedule 4, and regulation 21 in so far as it relates to that Part of that Schedule, on 1st January 2023;

(b) for all other purposes, on 16th December 2022.

Amendment of the Russia (Sanctions) (EU Exit) Regulations 2019

2.  The Russia (Sanctions) (EU Exit) Regulations 2019(1) are amended as set out in regulations 3 to 21.

Amendment of regulation 5 (power to designate persons)

3.  In regulation 5—

(a) in paragraph (1), after sub-paragraph (aa), insert—

“(ab) regulation 18C (trust services);”;

(b) in paragraph (1A), after sub-paragraph (b), insert—

“(ba) regulation 18C (trust services);”.

Amendment of regulation 16 (dealing with transferable securities or money-market instruments)

4.  In regulation 16—

(a) after paragraph (4F), insert—

“(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).”;

(b) in paragraph (5), for “and (4E)” substitute “, (4E) and (4G)”;

(c) in paragraph (6), for “and (4E)” substitute “, (4E) or (4G)”.

Amendment of regulation 17 (loans and credit arrangements)

5.  In regulation 17—

(a) after paragraph (2), insert—

“(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.”;

(b) in paragraph (3), for “and (2)” substitute “, (2) and (2A)”;

(c) in paragraph (4), for “or (2)” substitute “, (2) or (2A)”;

(d) in paragraph (5)—

(i) omit the definition of “the Amendment (No. 15) Regulations”;

(ii) in the definition of “category 3 loan”, in paragraph (c), for “the date on which the Amendment (No. 15) Regulations come into force” substitute “29th October 2022”;

(iii) in the definition of “category 5 loan”, in paragraphs (b)(i)(aa) and (c), for “the date on which the Amendment (No. 15) Regulations come into force” in both places substitute “29th October 2022”;

(iv) after the definition of “category 5 loan”, insert—

““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;”;

(v) after the definition of “owned”, insert—

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

(vi) in the definition of “relevant loan” for “or a category 5 loan” substitute “, a category 5 loan or a category 6 loan”.

Amendment of regulation 18B (investments in relation to Russia)

6.  In regulation 18B, in paragraph (8), in the definition of “relevant entity”, omit “has a place of business located in Russia but”.

Insertion of regulation 18C (Trust services)

7.  After regulation 18B (investments in relation to Russia), insert—

“Trust services

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.”

Amendment of regulation 19 (circumventing etc. prohibitions)

8.  In regulation 19(1)(a), for “18B” substitute “18C”.

Amendment of regulation 54B (interpretation of Chapter 6B)

9.  In regulation 54B, for paragraphs (a), (b) and (c) substitute—

“(a) “accounting services” has the meaning given in paragraph 2 of Schedule 3J;

(b) “advertising services” has the meaning given in paragraph 3 of Schedule 3J;

(c) “architectural services” has the meaning given in paragraph 4 of Schedule 3J;

(d) “auditing services” has the meaning given in paragraph 5 of Schedule 3J;

(e) “business and management consulting services” has the meaning given in paragraph 6 of Schedule 3J;

(f) “engineering services” has the meaning given in paragraph 7 of Schedule 3J;

(g) “IT consultancy and design services” has the meaning given in paragraph 8 of Schedule 3J;

(h) “public relations services” has the meaning given in paragraph 9 of Schedule 3J.”

Amendment of regulation 54C (professional and business services)

10.  In regulation 54C(1), for sub-paragraphs (a), (b) and (c) substitute—

“(a) accounting services,

(b) advertising services,

(c) architectural services,

(d) auditing services,

(e) business and management consulting services,

(f) engineering services,

(g) IT consultancy and design services, or

(h) public relations services.”

Amendment of regulation 59 (exceptions relating to loans and credit arrangements)

11.  In regulation 59—

(a) in paragraph (1)(c)(iii), for “the date on which the Amendment Regulations (No. 15) 2022 come into force” substitute “29th October 2022”;

(b) after paragraph (1)(c)(iii), insert—

“(iv) in the case of a category 6 loan, 16th December 2022;”;

(c) in paragraph (2)(a)(i)(cc), for “the date on which the Amendment Regulations (No. 15) 2022 come into force” substitute “29th October 2022”;

(d) after paragraph (2)(a)(i)(cc), insert—

“(dd) in the case of a category 6 loan, 16th December 2022;”;

(e) in paragraph (3)—

(i) omit ““the Amendment Regulations (No. 15) 2022 has the meaning given to it in regulation 17;”;

(ii) after the definition of “category 5 loan”, insert—

““category 6 loan” has the meaning given to it in regulation 17;”.

Amendment of regulation 60ZZA (exceptions relating to investments in relation to Russia)

12.  In regulation 60ZZA—

(a) in paragraph (1), for “contract concluded before the coming into force of the Amendment No. 12 Regulations,” substitute—

“contract—

(a) concluded before 16th December 2022, in the case of a relevant activity, or

(b) concluded before 19th July 2022, in any other case,”;

(b) in paragraph (3)—

(i) after the definition of “dealing with”, insert—

““person connected with Russia” is to be construed in accordance with regulation 19A(2);

“relevant activity” means directly or indirectly acquiring any ownership interest in or control over a person, other than an individual, which is not a person connected with Russia, for the purpose of 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;”;

(ii) in the definition of “relevant security issued by a person connected with Russia”, in paragraph (f), for “the coming into force of the Amendment (No. 12) Regulations” substitute “19th July 2022”;

(iii) for the definition of “relevant security issued by a relevant entity” substitute—

““relevant security issued by a relevant entity” means a security issued by a relevant entity for the purpose of an activity not prohibited by regulation 18B which—

(a)

is negotiable on the capital market, and

(b)

is of any of the following kinds but excluding instruments of payment—

(i)

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

(ii)

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

(iii)

any other securities giving the right to purchase or sell any security of a kind mentioned in sub-paragraph (i) or (ii);”;

(iv) omit the definition of “the Amendment (No. 12) Regulations”.

Insertion of regulation 60ZZB (exceptions relating to trust services)

13.  After regulation 60ZZA, insert—

“Exceptions relating to trust services

60ZZB.— (1)  The prohibitions in regulation 18C (trust services) are not contravened by any act done by a person (“P”)—

(a) in satisfaction of an obligation in respect of the provision of trust services by P to or for the benefit of—

(i) a designated person, or

(ii) a person connected with Russia,

where those services are provided in relation to the discharge of or compliance with UK statutory or regulatory obligations;

(b) for the purposes of complying with the prohibitions and obligations in Chapter 1 of Part 3 (asset freeze etc.);

(c) in connection with transferable securities or money-market instruments where dealing with such securities or instruments is not prohibited by regulation 16 or 18B.

(2) The prohibitions in regulation 18C are not contravened by the provision of the following trust services where the condition in paragraph (3) is met—

(a) trust services provided to a community amateur sports club registered as such with His Majesty’s Revenue and Customs;

(b) trust services provided to a trust for charitable services which—

(i) in Scotland or Northern Ireland, is registered as a charity, or

(ii) in England and Wales, is registered as a charity or is not required to register by virtue of section 30(2) of the Charities Act 2011 (charities required to be registered: general)(2);

(c) trust services provided to a pension scheme that is a registered pension scheme under Chapter 2 of Part 4 of the Finance Act 2004 (registration of pension schemes)(3);

(d) trust services for the purposes of a trust—

(i) created under, or for the purpose of, the default arrangements of a designated system or the default rules of a recognised body, or for the purpose of any action or proceedings taken by, or for, such a system or body under such arrangements or rules;

(ii) relating to the creation of a beneficial interest in securities belonging to a person whose name and address are maintained on a register of securities;

(iii) created by, or for, a segregating entity for the purpose of—

(aa) protecting funds or economic resources belonging to the segregating entity’s clients, or

(bb) complying with a legal obligation to safeguard and segregate funds or economic resources belonging to the segregating entity’s clients or to keep separate client records and accounts;

(e) trust services provided by the operator or trustee of an authorised unit trust scheme in relation to that scheme;

(f) trust services provided in the course of, or in connection with, carrying on by way of business the activity specified in the following articles of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001(4)—

(i) article 40 (safeguarding and administering investments),

(ii) article 51ZB (acting as trustee or depositary of a UK UCITS), or

(iii) article 51ZD (acting as trustee or depositary of an AIF),

except in so far as the activity relates to an unauthorised unit trust scheme;

(g) trust services provided in the course of, or in connection with, the acting by way of business as an agent holding funds, economic resources or documents in escrow until the performance of a contractual condition agreed between two or more other persons, including the person for whom the funds, economic resources or documents are being held.

(3)  The condition in this paragraph is that the trust services are not provided primarily to, or for the benefit of, a designated person or a person connected with Russia.

(4) Where the condition in paragraph (5) is met, the prohibitions in regulation 18C are not contravened by the provision of trust services for making funds and economic resources available to or for the benefit of—

(a) a person under the age of 18,

(b) a person who lacks capacity within the meaning of section 2 of the Mental Capacity Act 2005 (people who lack capacity)(5),

(c) a person who is incapable within the meaning of section 1 of the Adults with Incapacity (Scotland) Act 2000 (general principles and fundamental definitions)(6), or

(d) a person who is incapable of managing and administering their property and affairs, by reason of mental disorder within the meaning of article 3(1) of the Mental Health (Northern Ireland) Order 1986 (definition of “mental disorder” and related expressions)(7).

(5) The condition in this paragraph is that the trust services are not provided primarily to, or for the benefit of, a designated person.

(6) In this regulation, whether trust services are provided for the benefit of a person is to be construed in accordance with regulation 18C.

(7) In this regulation—

“FSMA” means the Financial Services and Markets Act 2000(8);

“the 1999 Regulations” means the Financial Markets and Insolvency (Settlement Finality) Regulations 1999(9);

“authorised unit trust scheme” has the meaning given in section 237 of FSMA (other definitions)(10);

“clearing member” has the meaning given in section 190(1) of the Companies Act 1989 (minor definitions)(11);

“community amateur sports club” has the meaning given in section 658 of the Corporation Tax Act 2010 (meaning of “community amateur sports club” and “registered club”)(12);

“default arrangements” has the meaning given in regulation 2(1) of the 1999 Regulations (interpretation)(13);

“default rules” has the meaning given in section 188 of the Companies Act 1989 (meaning of “default rules” and related expressions)(14);

“designated person” has the meaning given in regulation 18C(7);

“designated system” has the meaning given in regulation 2(1) of the 1999 Regulations(15);

“the operator” has the meaning given in section 237 of FSMA;

“participant” has the meaning given in regulation 2(1) of the 1999 Regulations(16);

“person connected with Russia” is to be construed in accordance with regulation 19A(2);

“recognised body” has the meaning given in section 313 of FSMA (interpretation of Part XVIII)(17);

“recognised central counterparty” has the meaning given in section 313 of FSMA(18);

“register of securities” has the meaning given in regulation 3(1) of the Uncertificated Securities Regulations 2001(interpretation)(19);

“segregating entity” means—

(a)

a clearing member of a recognised central counterparty,

(b)

a participant in a designated system,

(c)

a designated system, or

(d)

a recognised body;

“trustee” has the meaning given in section 237 of FSMA;

“trust services” has the meaning given in regulation 18C(7);

“unauthorised unit trust scheme” means a “unit trust scheme” within section 237(1) of FSMA that is not an authorised unit trust scheme.”

Substitution of regulation 60DA (trade: exception relating to professional and business services)

14.  For regulation 60DA (including the heading) substitute—

“Trade: exceptions relating to professional and business services

60DA.— (1) The prohibitions in regulation 54C (professional and business services), in so far as they relate to accounting services, business and management consulting services, engineering services or public relations services, are not contravened by any act done by a person (“P”) in satisfaction of an obligation in respect of the provision of those services by P to a person connected with Russia where the services are provided in relation to the discharge of or compliance with UK statutory or regulatory obligations, such obligations not arising under contract.

(2) The prohibitions in regulation 54C, in so far as they relate to advertising services, architectural services, engineering services or IT consultancy and design services, are not contravened by any act done by a person (“P”) in satisfaction of an obligation arising under a contract concluded before 16th December 2022, or an ancillary contract necessary for the satisfaction of such a contract, provided that—

(a) the act is carried out before the end of 15th March 2023, and

(b) P notifies the Secretary of State of the provision of the services, before or after the act is carried out, by the end of 15th March 2023.

(3) The prohibitions in regulation 54C, in so far as they relate to auditing services, are not contravened by any act done by a person (“P”) in satisfaction of an obligation arising from the appointment of P as the auditor of a parent undertaking (“C”) provided that—

(a) where C is a credit institution, the auditing services of P are for one or both of the purposes mentioned in paragraph (4);

(b) where C is not a credit institution, or is a credit institution that does not meet the condition in sub-paragraph (a)—

(i) P is appointed as auditor of C before 16th December 2022,

(ii) the act is carried out before the end of 31st May 2023, and

(iii) P notifies the Secretary of State of the provision of the services, before or after the act is carried out, by the end of 15th March 2023.

(4) The purposes are—

(a) C, in its capacity as a parent undertaking, deciding whether accounts of a subsidiary undertaking of C which is a person connected with Russia (“S”) should be included in consolidated group accounts of C, and

(b) the inclusion in consolidated group accounts of C of the accounts of S.

(5) The prohibitions in regulation 54C, in so far as they relate to auditing services, are not contravened by any act done by a person (“P”)—

(a) in satisfaction of an obligation arising from the appointment of P as the auditor of a subsidiary undertaking (“S”) in respect of the provision of those services to S in relation to the discharge of or compliance with UK statutory or regulatory obligations, and

(b) which results in the provision of those services indirectly to a person connected with Russia in that person’s capacity as a parent undertaking of S.

(6) The prohibitions in regulation 54C, in so far as they relate to IT consultancy and design services, are not contravened by the provision of—

(a) an “electronic communications network” or an “electronic communications service” (within the meanings given by section 32 of the Communications Act 2003(20)) that is used for civilian purposes, or

(b) services that are incidental to the exchange of communications over the internet, including—

(i) instant messaging,

(ii) videoconferencing,

(iii) chat and email,

(iv) social networking,

(v) sharing of photos, audio, videos, films or documents,

(vi) web browsing,

(vii) blogging,

(viii) web hosting, and

(ix) domain name registration services.

(7) The prohibitions in regulation 54C are not contravened by any act done by a person that is necessary for the official purposes of a diplomatic mission or consular post in Russia, or of an international organisation enjoying immunities in accordance with international law.

(8) For the purposes of this regulation, the following terms have the meanings given in regulation 54B—

“accounting services”, “advertising services”, “architectural services”, “auditing services”, “business and management consulting services”, “engineering services”, “IT consultancy and design services” and “public relations services”.

(9) For the purposes of this regulation—

“auditor” means a statutory auditor within the meaning of section 1210 of the Companies Act 2006 (meaning of “statutory auditor” etc)(21);

“consular post” is to be construed in accordance with paragraph A1 of Schedule 5;

“credit institution” means a body incorporated under the law of any part of the United Kingdom, the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account;

“diplomatic mission” is to be construed in accordance with paragraph A1 of Schedule 5;

“financial year” is to be construed in accordance with section 390 of the Companies Act 2006 (a company’s financial year);

“included in consolidated group accounts” has the meaning given in section 474 of the Companies Act 2006 (minor definitions) and “inclusion in consolidated group accounts” is to be construed accordingly;

“parent undertaking” has the meaning given in section 1162 of the Companies Act 2006 (parent and subsidiary undertakings);

“subsidiary undertaking” has the meaning given in section 1162 of the Companies Act 2006.”

Amendment of regulation 62A (exception for authorised conduct in a relevant country)

15.  In regulation 62A(1), for “and 18B (investments in relation to Russia)” substitute “, 18B (investments in relation to Russia) and 18C (trust services)”.

Amendment of regulation 64 (Treasury licences)

16.  In regulation 64—

(a) in paragraph (1), after “18B (investments in relation to Russia)”, insert “, 18C (trust services)”;

(b) in paragraph (1A)—

(i) in the opening words, for “18B” substitute “18C”;

(ii) in sub-paragraph (b), for “or regulation 17A” substitute “regulation 17A or regulation 18C”;

(c) in paragraph (2), after sub-paragraph (d)—

(i) omit “and”;

(ii) insert—

“(da) in the case of acts which would otherwise be prohibited by regulation 18C (trust services), where the Treasury consider that it is appropriate to issue the licence for a purpose set out in Part 3A of Schedule 5, and”.

Amendment of regulation 71 (“relevant firm”)

17.  In regulation 71—

(a) in paragraph (1)(d)—

(i) after sub-paragraph (iii), omit “or”;

(ii) in sub-paragraph (iv), omit “trust or”;

(iii) after sub-paragraph (iv), insert “or” and—

“(v) trust services;”;

(b) in paragraph (2)—

(i) in the opening words, omit “trust or”;

(ii) omit sub-paragraph (d)(i) and the “or” following it;

(c) in paragraph (3), after the definition of “firm” insert—

““trust services” has the meaning given in regulation 18C(7) (trust services).”

Amendment of regulation 72 (finance: powers to request information)

18.  In regulation 72(5)(c), in sub-paragraph (c) after “18B (investments in relation to Russia)”, insert “, 18C (trust services)”.

Disapplication of Banking Act 2009 requirement

19.  After regulation 97 (trade: overlapping offences), insert—

“Disapplication of Banking Act 2009 requirement to recognise third-country resolution actions

97A.— (1) The duty of the Bank of England to make a decision under section 89H(2) of the Banking Act 2009 (recognition of third-country resolution actions)(22) does not apply in relation to the notification of third-country resolution action in respect of—

(a) a designated person, or

(b) a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by a designated person.

(2) In paragraph (1)—

“designated person” has the same meaning as it has in Chapter 1 of Part 3 (asset-freeze etc.);

“third-country resolution action” has the meaning given in section 89H(7) of the Banking Act 2009.”

Amendment and insertion of Schedules

20.—(1) In Schedule 2A (Critical-industry goods and critical-industry technology)—

(a) in the table in Part 1A (Special materials and related equipment), in column 1 (items), insert the entries set out in Part 1 of Schedule 1 to these Regulations;

(b) after Part 8 (Aerospace and propulsion), insert Part 9 (Miscellaneous items), which is set out in Part 2 of Schedule 1 to these Regulations.

(2) In Schedule 3C (Defence and security goods and defence and security technology), in Part 4 (Chemicals and equipment), at the end of the first table, headed “Chemicals”, in the appropriate column corresponding to the column headings below, insert the following entries—

Chemical name	CAS Number
Calcium carbide	75-20-7
Carbon monoxide	630-08-0
Monoethyleneglycol	107-21-1
Sulphur	7704-34-9
Sulphur dioxide	7446-09-5

(3) After Schedule 3I (Russia’s vulnerable goods), insert Schedule 3J (professional and business services), which is set out in Schedule 2 to these Regulations.

(4) In Schedule 5 (Treasury licences: purposes)—

(a) in Part A1 (Interpretation), in paragraph A1 (interpretation of Schedule 5), after the definition of “medical goods”, insert—

““relevant financial authority” means authorities involved in the regulation of financial services in the United Kingdom, including the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England;”;

(b) in Part 1B (Correspondent banking relationships etc.), in paragraph 9N (financial regulation), omit sub-paragraph (2);

(c) in Part 1D (Foreign exchange reserve and asset management services), in paragraph 9V (financial regulation), omit sub-paragraph (2);

(d) after Part 3 (Investments in relation to Russia), insert Part 3A (Trust services), which is set out in Schedule 3 to these Regulations.

Minor amendments

21.  The amendments in Schedule 4 to these Regulations have effect.

Anne-Marie Trevelyan

Minister of State

Foreign, Commonwealth and Development Office

14th December 2022