Russian Influence in UK Economics and Politics

Boris Johnson’s announcement in Parliament (on Tuesday 22 February), of sanctions against Russian banks and individual Oligarchs, follows hot-on-the-heels of Russian aggression in the Ukraine and is backed by both Labour and the Lib Dems. Indeed, both opposition parties immediately called for sanctions to be widened and strengthened.

Posted on February 24, 2022
Written by Clare Puplett

Russia Sanctions

Boris’ firm stance on Russia sanctions, just the beginning of systemic review

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Sir Keir Starmer, Labour Leader, had previously called for action against Russian Banks and other economic influences, in the build-up to the latest aggression. He said: “Russian money has been allowed to influence our politics. This must be a time to put an end to oligarch impunity.”

A breakdown of the initial sanctions

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The banks are known to be key supporters of President Putin and the Russian state economy, handling large amounts of Russian state contracts, including military ones, whilst also actively supporting the Russian annexation of the Crimea. So, the move is intended to have a significant knock-on effect on the Russian economy and government.

What next for UK Banking, following Russia sanctions?

So, how does this first step on sanctions, and other possible follow-up sanctions, affect the UK Banking fraternity? 

It’s too early to say in detail, but it will be a blow. Not least to the anti-money laundering initiatives and responsibilities of any Bank, or other financial institution, that has established links with the sanctioned banks or individuals. This brings into focus issues around PEPS & Sanctions, Company Monitoring, UBOs and other areas of due diligence raising the importance of having a solution that can quickly implement change and be rolled out across a regulated businesses’ entire estate.

UPDATE 1st March.

As per the official GOV.UK website, the new sanctions are:

  • Restrictions to prohibit UK persons from undertaking financial transactions involving the Central Bank of the Russian Federation, the Russian National Wealth Fund, and the Ministry of Finance of the Russian Federation.
  • Restrictions against Russian financial institutions.
  • Measures to prevent Russian companies from issuing transferable securities and money market instruments in the UK. This will form a sweeping addition to existing financial restrictions. This is in addition to the prohibition of the Russian state raising sovereign debt in the UK already announced.
  • A power to prevent designated banks from accessing Sterling and clearing payments through the UK. This will match the power the US already has. Banks subject to this measure will be unable to process any payments through the UK or have access to UK financial markets.
  • A set of measures to strengthen significantly our trade restrictions against Russia. This will include a prohibition against the export of a range of high-end and critical technical equipment and components in sectors including electronics, telecommunications, and aerospace.
  • The previously announced extension of financial and trade measures applying to Crimea to the DNR and LNR regions.

If you would like to learn more about PEPS & Sanctions, Company Monitoring, UBOs and other areas of due diligence, then contact NorthRow or request a callback.

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