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PLENITUDE INSIGHTS: UK Human Right Sanctions Regime

Written by Manmeet Lotay | Jun 2, 2021 3:30:00 PM

The UK Notice of Designation states that the measures target Chinese government officials and the Xinjiang security body responsible for the administration of China’s so-called “re-education” policy in XUAR.  The sanctions imposed on China are limited to individuals and entities that are centre to allegations of Human Rights abuses in XUAR.  The measures include asset freezes and travel bans, which are usual components applied to this type of targeted action.

This response to the situation in XUAR represents the first time in over 30 years that the UK has sought to sanction China for Human Rights Abuses.  The UK implemented these measures under the Global Human Rights Sanctions Regulations 2020.  These regulations operate under the Sanctions and Anti-Money Laundering Act 2018, enforced on December 31, 2020.

The asset freezes prohibit (directly or indirectly) making funds or economic resources available to or for the benefit of the designated persons.  The prohibition on dealing with funds or economic resources of the designated persons also extends to any legal entities that they may (directly or indirectly) own or control even if that entity may not be listed on the UK Consolidated list of Financial Sanctions Targets.

It is important for all firms to conduct screening for sanctions daily.  Beneficial-ownership is a particular area which sanction red flags often are identified, especially during the on-boarding stage or periodic customer risk reviews.  Firms are encouraged to perform a health check of their operations in, or related to, China and ensure to:

  • Effective list management controls ensuring lists are updated in line with these changes;
  • Conduct sanctions screening on all counterparties; and
  • Perform due diligence on all third parties to ensure they are not doing business with sanctioned entities, nor entities with controllers or beneficiaries who are designated persons to avoid breaches to economic sanctions.