My Lords, these regulations amend the Russia (Sanctions) (EU Exit) Regulations 2019. These instruments were laid on 14 December 2023 under powers provided by the Sanctions and Anti-Money Laundering Act 2018. They entered into force on 15 and 26 December 2023,
and 1 January 2024. The instrument has been considered and not reported on by the Joint Committee on Statutory Instruments.
These instruments contain trade and financial measures, co-ordinated with our international partners, to increase the pressure on Putin over his brutal and illegal war against Ukraine. They ratchet up the pressure on Russia’s war machine and economy as part of the most severe package of economic sanctions that that country has ever faced.
The No. 4 regulations continue the UK Government’s commitment to ban the export of all items that have been used by Russia on the battlefields to date. Building on existing extensive prohibitions, these regulations ban the export of further products that could be used by the Russian military or industry, including electronics and machine parts. The legislation also delivers on commitments made by the Prime Minister at the G7 leaders’ summit last May to ban imports of Russian metals, including copper, aluminium and nickel, by the end of 2023. It extends the existing prohibition on luxury goods to include a ban on services ancillary to their movement and use. This means that those subject to UK sanctions can no longer provide financial services and funds, technical assistance and brokering services related to luxury goods.
There are also amendments to other product definitions and coding to ensure clarity and consistency with partners. On the financial side, this includes new obligations for persons designated under the Russia financial sanctions regime to report any assets that they own, hold or control in the UK or worldwide as a UK person to the relevant authorities. A further requirement has been placed on relevant firms to inform HM Treasury of any foreign exchange reserves and assets belonging to the central bank of Russia, the Russian Ministry of Finance or the Russian National Wealth Fund.
The regulations also amend existing regulations that prohibit UK credit and financial institutions processing sterling payments that have travelled to, from or via sanctioned credit and financial institutions, in order to expand this prohibition to include non-sterling payments. The prohibition adds a new exception to enable UK credit and financial institutions to transfer funds internally in certain circumstances for the purpose of compliance and regulation.
Finally, alongside the No. 4 regulations, we have introduced a new financial sanctions licensing ground to support UK entities in divesting their Russian interests. The licensing ground will also permit UK entities to buy out investments from designated persons and the Russian state, provided those funds go into a frozen account. We will proceed with a further prohibition on ancillary services related to metals when this can be done in concert with international partners.
The No. 5 regulations deliver the Prime Minister’s commitment, made at the G7 summit last May, to tackle the revenue that Russia generates from the export of diamonds. They prohibit the import, acquisition, supply and delivery of diamonds and diamond jewellery produced by Russia. A further G7-wide ban on the import of Russian diamonds processed in third countries is expected to come into force from 1 March this year.
I should add that the Joint Committee on Statutory Instruments has been informed of a minor drafting error in the Russia (Sanctions) (EU Exit) (Amendment) (No. 5) Regulations 2023. To remedy this, we have identified another instrument where this error can be corrected; we aim to lay it this later this year, with it coming into force as soon as possible. I wrote to the noble Lord, Lord Collins, with some detail on this; it is important that I put this part of my letter on the record. We consider that the Russian regulations can stand as they are in the meantime because, although the incorrect terminology was used, the exceptions set out in Regulation 60DC(2)(d) of the Russia regulations remain clear. The Government plan to lay a separate miscellaneous sanctions amendment statutory instrument later this year, as I said. I hope that, with that assurance, I can give the Committee the absolute understanding that this minor drafting mistake does not impact on the measure.
These latest measures demonstrate our determination to target those who participate in or facilitate Putin’s illegal war. Overall, the UK has sanctioned more than 1,900 individuals and entities, of which 1,700 individuals have been sanctioned since his full-scale invasion of Ukraine. More than £20 billion-worth of UK-Russia trade is now under sanction, resulting in a 94% fall in Russian imports into the UK—comparing one year pre invasion to one year post invasion—as well as a 74% fall in UK exports to Russia.
Sanctions are working. Russia is increasingly isolated, cut off from western markets, services and supply chains. Key sectors of the Russian economy have fallen off a cliff, and its economic outlook is bleak. The UK Government will continue to use sanctions to ratchet up the pressure until Putin ends his brutal invasion of Ukraine. We welcome the clear and continued cross-party support for this action. I beg to move.
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