Introduction
In a fragmented regulatory landscape, businesses with international operations are struggling to ensure that their export practices are aligned with ever evolving sanctions regimes. At Eldwick Law, we recently advised a UK-based manufacturer on whether the export of medical products to Russia, via India, complied with the Russia (Sanctions) (EU Exit) Regulations 2019 (the “Regulations”).
Our solicitors have a deep and nuanced understanding of the UK sanctions regime, commodity code classifications, and the trade and financial compliance expectations placed on exporters working across multiple jurisdictions.
Understanding the UK’s Russia Sanctions Framework
The UK’s autonomous sanctions regime, developed post-Brexit, has grown significantly. The Regulations impose complex trade restrictions targeting goods, services, and technology perceived to support the Russian economy or military apparatus.
Many businesses assume that because goods are shipped via a non-sanctioning jurisdiction, such as India, they avoid UK sanctions liability. However, UK sanctions law applies where the exporter is UK-established or legally responsible for the goods. Trade prohibitions extend beyond direct exports to Russia and encompass:
- Indirect supply via third countries (such as India);
- Goods “for use in Russia” even if the transaction originates outside the UK; and
- Restrictions on making goods available to persons “connected with Russia”.
The ‘extra-territorial’ reach of the UK sanctions regime is often misunderstood by businesses with overseas operations contracting with UK entities and supplying items to Russia. Our expertise ensures that UK companies can mitigate the risk of sanctions by assessing both end-use and end-user as well as implementing a robust Standard Operating Procedure with an all-encompassing sanctions policy to remain compliant with the Regulations.
Our sanctions regulatory practice also regularly assists high-value clients in carrying out the necessary due diligence checks across their supply chains, from customers to intermediaries and logistics partners.
Additionally, banks and financial institutions now expect documentary evidence of compliance which cannot be satisfied by reliance on third party certificates, such as an MHRA’s Certificate of Free Sale. Under regulation 19 of Regulations, it is a criminal offence for a person to knowingly or recklessly make funds or economic resources available, directly or indirectly, to a designated person or for the benefit of such a person. Financial institutions will therefore want to ensure that no part of a transaction, including those routed through correspondent banking relationships or involving trade finance instruments, involves a prohibited end-user or supports a restricted sector. Banks, as “relevant firms” under the Office of Financial Sanctions Implementation (OFSI) guidance, are under a duty to freeze assets and report to OFSI if they suspect a transaction involves a designated person or is otherwise non-compliant.
At Eldwick Law, we help exporters seeking to move goods to or through jurisdictions with known Russia-facing trade flows to disclose comprehensive transactional documentation such as commercial invoices, bills of lading, end-user undertakings, and evidence of customer and third-party screening to relevant financial institutions.
We also support clients in preparing sanctions legal opinions tailored to the factual and contractual structure of a transaction. These opinions assess compliance across the Regulations, OFSI guidance, and applicable Sanctions and Money Laundering Act (SAMLA) obligations. We work closely with clients’ internal compliance and legal teams to identify and manage “red flag” indicators and assess the likelihood of indirect supply to reduce the risk of inadvertent sanctions breaches.
India as a jurisdiction of transit
We have previously written about the sanctions risks faced by Indian businesses and have advised UK-based manufacturers of medical devises and surgical supplements on whether the exports of these products to Russia from India comply with the Regulations. We can assess whether the goods in question fall under several key and relevant categories of restricted items, including:
- Critical-industry goods
- Dual-use goods
- Defence and security goods
- G7 dependency goods
- Russia’s vulnerable goods
A crucial element of our analysis, when considering trade restriction sanctions, will be commodity code classification. If your products do not intersect with the prohibited goods lists, then the Regulations carve out exclusions for certain goods intended for medical use or classified as medical devices.
Conclusion
Eldwick Law is well-placed to advise UK and international businesses trading with jurisdictions under sanctions. Our multilingual team assists clients across the full spectrum of sanctions regulation advice, including:
- Interpreting complex regulatory frameworks;
- Mapping supply chains against prohibitions;
- Drafting and implementing sanctions compliance policies;
- Defending regulatory investigations or responding to compliance queries from banks and regulators.
Contact Us
If your business is trading internationally and requires expert advice on sanctions compliance, contact our team at Eldwick Law.
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