The United Kingdom is following in the lead of the United States, the European Union and others in banning the export of luxury goods to Russia. By way of new sanctions – which not only prohibit the export of luxury goods to Russia but also impose a new 35 percent tariff on more than $1 billion worth of Russian imports, including metals, vodka, fertilizer, and other commodities – the UK aim to “further isolate the Russian economy from global trade, ensuring it does not benefit from the rules-based international system it does not respect,” finance minister Rishi Sunak said in a statement on Tuesday.
“The government said the export ban would come into effect shortly and it would soon set out which products were affected,” Reuters reported on Tuesday, noting that they will “likely include high-end fashion” – presumably, from the likes of Burberry, “works of art and luxury vehicles,” with Jaguar Land Rover and Aston Martin falling within the latter category.
Not limited to luxury goods, the latest UK sanctions announcement follows from a joint statement from the Office of Financial Sanctions Implementation (“OFSI”), the Financial Conduct Authority, and the Bank of England on March 11, in which they confirmed that all UK financial services firms, including those in the crypto asset space, are expected to comply with UK sanctions. This statement, along with a statement issued by the U.S. Financial Crimes Enforcement Network on March 7 and amendments to the definition of “transferable securities” Regulation 833/2014 from the European Union to expressly include crypto assets, “reflects concerns that crypto assets may be used to circumvent sanctions,” according to UK-headquartered firm Herbert Smith Freehills LLP.
Specifically on the crypto front, attorneys from Herbert Smith Freehills LLP state that the UK government has set out “six sanctions-specific controls that firms should consider implementing, including updating business-wide and customer risk assessments to account for changes in the nature and type of sanctions measures, and in respect of customer onboarding, screening and re-screening processes to ensure they are appropriately attuned to sanctions risks.”
Additionally, the OFSI, the Financial Conduct Authority, and the Bank of England pointed to several “red flags for sanctions evasion,” including: (1) transactions to/from a wallet address associated with a sanctioned entity or otherwise deemed to be high-risk (based on transaction history or that of associated addresses, for example); (2) transactions involving crypto asset exchanges or custodian wallet providers known to have poor customer due diligence procedures or which are otherwise considered high risk; and (3) the use of tools to obfuscate the location of a customer or the source of crypto assets.