UK Sanctions On Russia

This report presents findings from the second meeting of the UK Sanctions Implementation and Strategy Taskforce, held in October 2024. The discussion aimed to identify opportunities to optimise the use of existing sanctions regimes and enhance the effectiveness of sanctions as a strategic tool. Members provided a list of recommendations for the UK to develop a strategy which not only sends a clear signal of UK priorities, but also has a tangible impact.

Introduction

Following Brexit, the UK had an opportunity to develop its independent sanctions framework to address the evolving geopolitical landscape and its own foreign policy messaging. This framework included a broader range of thematic and geographic sanctions regimes, targeting issues such as corruption, human rights abuses and cyber activities, while countering threats to international peace and security. In an attempt to give substance to this vision, in February 2024, the UK published its first Sanctions Strategy, outlining its approach to ensuring that sanctions are effective, giving the UK more influence in the world, and helping to “keep Britain safe”.

In June 2024, RUSI’s Centre for Finance and Security set up the UK Sanctions Implementation and Strategy Taskforce, made up of 50 former UK and other government officials, senior sanctions executives from the financial sector and industry, and academics, from the UK and elsewhere. The first meeting highlighted a series of implementation challenges, such as: resourcing and expertise; engagement with industry; alignment with international partners; and the lack of a clear set of objectives for the UK’s sanctions policy. Notably, while Russia has become the focus of the UK’s sanctions response, the Taskforce also emphasised the need for a more comprehensive and flexible approach beyond Russia alone.

This report presents findings from the second Taskforce meeting, which was held in October 2024. The discussion aimed to identify opportunities to optimise the use of existing sanctions regimes and enhance the effectiveness of sanctions as a strategic tool. Members provided a list of recommendations for the UK to develop a strategy which not only sends a clear signal of UK priorities, but also has a tangible impact. None of the comments made by the Taskforce members are attributable.

Thematic Sanctions

The Taskforce first discussed ways to increase the effectiveness of the UK’s thematic regimes, which had been described in the previous meeting as mostly “presentational” and lacking clear criteria and vision. The discussion focused on three regimes: Global Anti-Corruption (GAC) sanctions; Global Human Rights (GHR) sanctions; and cyber sanctions.

Global Anti-Corruption Sanctions

The Taskforce recognised the steps the UK has taken to address corruption through its GAC sanctions regime. However, discussions highlighted gaps in the current approach that hinder its legitimacy and credibility, mostly linked to the lack of clarity regarding the criteria and purpose for which these sanctions are deployed, and the strategy for their use.

Members reiterated the risk of sanctions targeting corruption in name only without being accompanied by genuine disruption of related networks and criminal enforcement. They described the GAC regime as an “uncomfortable fit” between sanctions and criminal enforcement, with sanctions being prioritised over the actual targeting of corruption. One Taskforce member pointed to the EU’s misappropriation sanctions regimes as a useful cautionary tale for anti-corruption sanctions. Introduced in 2011 to target corruption and financial misappropriation by government officials in Egypt and Tunisia, these sanctions regimes struggled to achieve tangible results, securing no convictions and becoming the subject of political disputes. The failure of these regimes, according to Taskforce members, resulted from a lack of criminal enforcement efforts due to limited resources and political will.

The Taskforce warned that without robust investigations, prosecutions and confiscations of the proceeds of corruption accompanying the rollout of anti-corruption sanctions, the GAC regime might face a similar fate and lack credibility. To ensure this does not happen, members recommended appropriate resourcing of law enforcement agencies, and stronger coordination between government agencies responsible for sanctions enforcement and criminal prosecutions. They also argued that better processes for listing and delisting would be useful for more targeted action against corrupt individuals.

Another Taskforce member stressed the disparity between the UK’s efforts to combat corruption at home and its actions abroad. Noting the UK’s recent decline in international rankings such as Transparency International’s Corruption Perceptions Index, they argued that the lack of focus on domestic corruption weakens the UK’s credibility in the global fight against corruption and its sanctions response.

To increase international credibility, Taskforce members suggested complementing anti-corruption sanctions, measures to tackle domestic corruption, and criminal enforcement with capacity-building in target countries, particularly in the Global South. One member from civil society cautioned that a failure to cooperate with local justice systems could result in sanctions being perceived as neocolonial, undermining their legitimacy and impact.

Global Human Rights Sanctions

The Taskforce also discussed GHR sanctions, which have become a prominent aspect of the UK’s independent sanctions regime, particularly through the Global Human Rights Sanctions Regulations 2020. GHR sanctions allow the UK to target individuals and entities involved in serious human rights violations by freezing their assets and restricting their travel. While recognising the value of these sanctions in principle, Taskforce members noted that the sanctions were far from realising their full potential.

One primary concern raised by Taskforce members was that human rights sanctions often do not serve their intended purpose of deterrence, but are instead adopted as a form of punishment. The discussions highlighted that, similarly to GAC sanctions, GHR sanctions often operate in a vacuum, without the support of additional efforts to promote human rights globally. Some participants suggested including GHR sanctions in a broader human rights strategy, combining them, for instance, with diplomatic efforts and criminal prosecution of human rights abuses.

Taskforce members from the legal sector also noted that these kinds of sanctions are in place indefinitely, with little evidence that they influence the behaviour of the targeted individuals or regimes. This situation, combined with a lack of clear criteria for lifting human rights sanctions or explanation of the reasoning behind designations, raises questions about the long-term purpose and effectiveness of these sanctions, and risks reducing their overall legitimacy. Taskforce members stressed the need to gather more data on the impact of GHR sanctions on the ground, for instance by establishing collaboration with local organisations to assess whether the sanctions were providing accountability for human rights abusers or deterring further abuses.

Cyber Sanctions

Cyber sanctions have also emerged as a growing area of focus for the UK, particularly as cybercrime and state-sponsored cyber activities have become more prevalent. These sanctions aim to disrupt the financial operations of cyber-criminals and state-backed actors involved in malicious cyber activities.

Taskforce members noted that compliance with cyber sanctions is not particularly complex for financial institutions (FIs) in terms of screening, but that challenges arise with tracing the broader criminal networks involved in cybercrime. Similarly to GAR and GHR sanctions, the key challenge was the lack of criteria clarifying what it takes for a specific network to be sanctioned. Some members noted that the more cyber sanctions designations there are, the easier it is for the industry to learn and comply. However, for cyber sanctions, as well as for other lists, designations are often the result of the work of pressure groups or the gathering of information found in the public domain, which can be altered. Participants noted that this made it difficult for the private sector to understand why sanctions targeted some groups rather than others. Some Taskforce members from the private sector also argued that FIs do not operate in an active intelligence-sharing community within the sector, with banks only seeing data at their disposal and becoming overreliant on information in the public domain.

According to the Taskforce, any information that authorities can provide will make a difference. An example of new approaches to mitigating this challenge is the US Office of Foreign Assets Control’s move to add IP and virtual wallet addresses to sanctions designation details; FIs can input these addresses into their compliance systems to support their efforts to unveil the networks involved.

Members of the Taskforce also stressed the legal and operational grey areas for insurers. They noted that insurers may face conflicting obligations: on the one hand, they may be required to pay claims to clients affected by ransomware, but on the other hand, if they identify a designated entity to be behind a ransomware attack, they must avoid making payments because that would violate sanctions. To overcome this issue, the Taskforce recommended the UK issues clearer guidelines on how insurers should handle claims related to ransomware attacks, and share best practices on how to identify and prevent cyber-related sanctions violations.

Geographic Sanctions

The Taskforce discussed strategies to enhance the effectiveness of the UK’s country-specific sanctions. Members emphasised the importance of maintaining a balanced approach, ensuring that the focus on Russia does not overshadow other critical sanctions regimes, such as those applied to North Korea and Iran. These states continue to pose significant global security threats through their illicit activities and development of nuclear and other weapons programmes. However, the implementation and enforcement of related sanctions regimes have seen reduced focus in recent years.

Taskforce members identified common challenges related to the current geographic regimes. First, they pointed out the persistence across multiple regimes of similar sanctions-evasion practices. For instance, North Korea’s continued use of ship-to-ship oil transfers, flag-hopping, smuggling, and collaboration with other sanctioned countries enable it to evade sanctions and sustain the development of its nuclear weapons programme, while also serving as a blueprint for other sanctioned jurisdictions, such as Russia. According to participants, the cessation of the UN Panel of Experts on North Korea, which previously played a key role in monitoring and reporting on suspicions of sanctions evasion, has also weakened oversight and enforcement, and increased evading activities. Taskforce members agreed that there was an opportunity for the UK to assume a leadership role in ensuring that sanctions violations are properly monitored and addressed. They suggested: expanding sanctions designations to cover individuals and entities involved in facilitating partnerships among sanctioned jurisdictions; ensuring the adequate coordination of geographically divided desks within UK government departments; and implementing measures to cut off access to shared resources and illicit networks.

Second, as regimes such as North Korea and Russia progressively disengage from Western financial and corporate ecosystems to avoid sanctions, there are fewer opportunities to disrupt evasion activities through the compliance efforts of Western businesses. Some Taskforce members from the insurance community emphasised that overcompliance by the private sector may exacerbate this issue. They noted that, while some government officials view overcompliance as a positive trend that keeps businesses away from high-risk activities, those officials neglect the resulting unintended consequences, such as the creation of parallel structures by sanctioned entities outside the scope of G7 regulatory oversight. Members cited the growing role of Russia’s shadow fleet as an example of this. The oil price cap (OPC) was designed to leverage the fact that 90% of the world’s ocean-going tonnage was insured by Protection and Indemnity (P&I) Clubs in the International Group, all of which are based in G7 countries, and the clubs could therefore police the sanctions. However, Russia has moved away from Western services through the development of the shadow fleet, which now reportedly transports 90% of Russian crude oil, beyond Western oversight. Taskforce members recommended that the UK expand the designations of vessels involved in violations of the OPC to strengthen the enforcement of maritime sanctions.

Furthermore, representatives from the P&I insurance community noted that they are largely unconcerned with North Korean sanctions, because vessels associated with the country rarely enter Western ports or rely on major Western insurers. However, this leads to a knowledge gap within the insurance and shipping sectors, where companies have little direct experience dealing with North Korea’s maritime operations, and may therefore be ill-prepared to address the sophisticated evasion techniques being used.

Third, the current system relies heavily on private data providers for information to conduct sanctions screening, without a guarantee of the accuracy of the data they provide. The absence of centralised oversight or clear competency in the management of entity-screening systems means that many organisations may be operating with outdated or incomplete information, reducing the overall effectiveness of sanctions. Taskforce members reiterated the need for the UK government to expand its collaboration with industry and provide more information about sanctioned entities and suspected involved actors, to support compliance in the private sector, reflecting the national security priority placed on the use of sanctions. To address this, a Taskforce member suggested exploring opportunities for industry secondments, where experienced professionals from the private sector could work within government agencies to improve mutual understanding of industry-specific challenges. Such initiatives could bridge the gap between government and industry, accelerating the development of more effective sanctions policies and improving compliance across sectors.

Fourth, participants stressed challenges in the enforcement of geographic sanctions similar to those found in the enforcement of thematic regimes. According to one participant, the issue with enforcement is rooted in the lack of proactivity in investigations – the launch of an investigation is often reliant on self-reporting – and the number and amount of fines imposed, which do not act as a deterrent in comparison to the cost of compliance. Members recommended a speedier upscaling and expansion of the remit and resources of agencies responsible for enforcing sanctions. To achieve this, the UK should consider a more collaborative and unified approach to improve information sharing; an increase in resources across the whole sanctions architecture; and greater engagement with industry.

Fifth, consistent with the point raised for GAC/GHR sanctions, the Taskforce noted that the UK should lay out a clear series of actions required for the wind-down of sanctions for geographic regimes. While the grounds for which sanctions were adopted against actors such as Russia remain active, planning for the eventuality of a wind-down or an offramp helps to avoid the unintended consequences of overly extended sanctions. Ensuring that sanctions are well-targeted and calibrated, both in the short and the long term, will help maintain the UK’s credibility and the strategic effectiveness of sanctions in achieving a behavioural change in their targets.

Recommendations

To improve the credibility and legitimacy of the UK’s thematic and geographic sanctions regimes, Taskforce members provided the following recommendations:

1. Strengthen and unify the UK government architecture. Effective sanctions implementation and enforcement require greater coordination between the various government departments involved, including the FCDO, the Treasury and the Home Office – and, where relevant, intelligence services. A more unified approach is needed to ensure that sanctions are implemented consistently across departments and that existing programmes are aligned. The UK should consider developing an integrated sanctions “agency” model that would address any inter-institutional competitiveness, gaps and/or opportunities for miscommunication; improve information-sharing; and simplify reporting obligations for the private sector.

2. Expand and review the list of designated entities and individuals. The processes and criteria for listing individuals and entities under both thematic and geographic regimes should be reviewed, to ensure sanctions meet the intended goals and are reaching the right targets. The UK should also continue broadening its sanctions on entities and individuals, particularly those involved in facilitating sanctions evasion. This includes targeting and sharing information with the private sector on shell companies, financial intermediaries and other entities that play a role in efforts to circumvent sanctions beyond the Western ecosystem.

3. Provide more and better data. The UK government should focus on improving the quality and accessibility of data used in its sanctions regimes. This includes providing FIs and other private sector actors with up-to-date and accurate data, incorporating newer data points such as IP and virtual wallet addresses. Additional training and capacity building should be offered to both government agencies and private sector firms, particularly smaller companies, to ensure their expertise in managing the increasing volume and complexity of data involved in sanctions enforcement.

4. Improve public-private collaboration. Regular consultations with FIs, technology companies and other private sector actors are essential to ensure that sanctions are effectively implemented and that their design has the best chance of success. The UK government should establish a formal mechanism for ongoing dialogue with the private sector, focusing on emerging challenges such as cyber sanctions and ransomware, and ensuring that companies have the guidance they need to comply with sanctions regulations.

5. Balance domestic and international efforts. The UK government must align its domestic efforts with its international actions. This includes strengthening domestic anti-corruption laws, frameworks and enforcement mechanisms to complement the GAC regime. The UK should also focus on diplomatic engagement and capacity-building initiatives in strategic jurisdictions, such as providing training to law enforcement agencies or supporting the development of local anti-corruption frameworks, recognising that sanctions are one tool in a wider foreign policy toolbox.

6. Enhance sanctions enforcement capabilities. Enforcement of sanctions has been inconsistent, with significant gaps in the UK’s ability to investigate and prosecute sanctions violations. The UK government should introduce clearer enforcement guidelines, similar to the framework established under the Bribery Act, to ensure penalties for sanctions violations are appropriate and proportional and focus on genuine sanctions evaders rather than low-hanging fruit. Furthermore, the UK government must increase funding and resources to enable more effective investigations and prosecutions.

7. Enhance maritime enforcement. Given Russia’s and North Korea’s reliance on maritime sanctions evasion tactics, the UK government should invest in better maritime tracking systems, and coordinate with international partners to improve enforcement in key shipping lanes. It should prioritise targeted actions against vessels involved in ship-to-ship transfers and flag-hopping, along with secondary sanctions on facilitators of these activities. The UK government should ensure it takes a leadership role in the newly formed Multilateral Sanctions Monitoring Team, leveraging its expertise in key areas such as maritime sanctions and financial services in support of this renewed initiative.

8. Combine sanctions with criminal enforcement. To ensure the effectiveness of sanctions, they must be deployed together with additional tools, such as robust criminal justice responses. Sanctions should be accompanied by more investigations, prosecutions and confiscations of criminal proceeds. Law enforcement agencies such as the Combating Kleptocracy Cell should intensify their efforts to prosecute money laundering and corruption offences, together with sanctions evasion offences.

9. Improve monitoring and impact assessment. The UK government should invest in monitoring and evaluation mechanisms to assess the impact of its sanctions regimes. For instance, the FCDO could collaborate with international partners and local organisations to gather data on the effects of sanctions on the ground. Regular assessments can both help to ensure that sanctions are achieving their intended outcomes and inform decisions about whether they should remain in place or whether new ones should be adopted.

10. Establish a roadmap for lifting sanctions. The UK government should develop a framework for reviewing and potentially rolling back sanctions. This framework should include specific benchmarks for compliance, such as changes in the behaviour of the targeted individuals or regimes. Sanctions should be seen as a tool for encouraging behavioural change, not just as a punishment. Any wind-down needs to be coordinated with international partners to avoid creating loopholes or undermining the overall sanctions regime. This is applicable across all sanctions regimes to ensure that sanctions have a clear endgame that compels targets to change their behaviour in exchange for sanctions relief.

The Taskforce agreed that sanctions have become a preferred tool in the UK’s foreign policy arsenal, particularly in the wake of Russia’s full-scale invasion of Ukraine. However, as the scope and complexity of sanctions continues to expand, the Taskforce was clear that the UK government must ensure that the entirety of its sanctions regimes remain effective. By implementing the recommendations outlined in this report, the UK government can enhance the effectiveness of its thematic and geographic sanctions, ensuring that they achieve real impact in both disrupting illicit activities and promoting international security. Failure to address these issues risks reducing the UK’s sanctions regime to a largely symbolic tool, rather than one that drives meaningful change on the global stage.

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Gonzalo Saiz is a Research Fellow at the Centre for Finance and Security at RUSI, focusing on sanctions and counter-threat finance. His research focuses on sanctions implementation, circumvention and evasion tactics, and sanctions enforcement, primarily through SIFMANet (Sanctions and Illicit Finance Monitoring and Analysis Network). Gonzalo’s reseach on counter-threat finance includes work on the abuse of non-profit organisations for terrorist financing, crime-enabled terrorist financing, and the financing of right-wing extremism.

Maria Nizzero is a Research Fellow at the Centre for Finance and Security at RUSI. Her research examines the UK, EU and global financial crime landscape, asset recovery and sanctions, and the foreign policy dimension of illicit finance. Maria holds a PhD in International Public Law and International Relations from the Universitat Pompeu Fabra in Barcelona, where she was an Associate Professor for four years, teaching EU Politics and Institutions.