Calls to overhaul UK’s ‘outdated’ sanctions regime
Experts are calling for an overhaul of the UK’s “outdated” sanctions regime, which is “ill-equipped” to face modern forms of crime and conflict.
Former justice secretary Robert Buckland has argued for reforming the UK sanctions system to better suit modern threats, writing in a report by the Adam Smith Institute (ASI).
The Sanctions and Anti-Money Laundering Act 2018 was introduced after Brexit as the UK government sought to develop a framework independent to that of the EU’s.
However, the report called for replacing the existing sanctions regime with an EU-style tiered system. Recourse would span from “symbolic gestures” to “serious coercion.”
Adapting to new threats
ASI Director of Public Affairs, Maxwell Marlow, said “Britain’s sanctions regime is stuck in the past – designed for an era of tanks and trenches, not cyber warfare and political interference.”
The report identifies five “emerging categories of state aggression” including cyber-attacks, human rights abuses, economic sabotage, environmental harm, and political interference.
A proposed new sanctions regime would range from breaking diplomatic relations with a country – expelling and recalling diplomats and censoring hostile state-controlled media – to introducing more specific financial sanctions.
A new class of financial sanctions would better address those who use crypto as an anonymous tool by which “nefarious actors” launder money.
These sanctions could target the capital reserves and assets of countries, businesses, or individuals, restricting them from buying or selling financial assets, or accessing financial services.
According to the report, comprehensive sanctions constitute the most absolute and weighty response to wrong-doing, as these prohibit “the trade, sale and exchange of goods and services” with sanctioned actors.
These include immigration sanctions, and could be enforced by the Home Office in addition to the Departments for Trade and Transport.
Comprehensive sanctions could be applied in cases such as Russia’s use of a “shadow fleet” to circumvent a cap on Russian energy exports to the EU and the G7.
The report argued that the response to sanctions evasion in Russia’s case was too slow, something which could be corrected by placing the burden of proof on ‘suspicious’ fleets.
Frozen assets
Frozen assets belonging to hostile states could be managed by the UK government and utilised for compensation or reconstruction.
The report said the UK holds £21.6 billion in frozen state assets from hostile parties, which are “unlikely” to be unfrozen in the coming years.
According to the ASI, policy-makers have identified that these assets are “perfectly placed for aiding in the reconstruction of states such as Ukraine, indicating a more concerted shift by MPs in weaponising the sanctions system in further foreign policy goals.”
Existing sanctions are too reactive and fail to deter repeat offenders, the report said, calling for individuals who desist from sanctioned behaviour to be spared sanctions, thus creating an incentive to adhere to UK laws.
There should be an “off-ramp” which permits divestment from sanctioned activity in a “clear and transparent way,” the ASI argues.