How to use听exceptions and听licences听to听comply with听sanctions听

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Overview

An 鈥榚xception鈥�,听listed in the regulations, gives an automatic exemption to a given activity.听It means you do not have to have a licence,听as long as听certain defined circumstances apply to your activity.听

If no exception applies,听then a licence is required for any activity that would otherwise be prohibited under the regime.听A licence is written permission听to carry out听the听activity听that would otherwise be听prohibited.听Licences are issued, managed and听if necessary听revoked听by:听

the Office of Financial Sanctions Implementation听(OFSI)听for financial sanctions听and the Oil Price Cap听
the Insolvency Service for director disqualification sanctions听
the Export Control Joint Unit (ECJU) (part of the Department for Business and Trade (DBT)听for trade sanctions relating to the export of goods听subject to strategic export controls听and听the听provision of听associated听ancillary services
DBT鈥檚 Import Controls and Sanctions team听for import听sanctions听听
DBT鈥檚 Office of Trade Sanctions Implementation (OTSI) for trade sanctions relating to standalone services,听goods听not subject听to听strategic export controls,听and associated ancillary services
the Department for Transport (DfT) for transport sanctions听

Exceptions

Each regime contains its own exceptions, but there are many exceptions which are common to all or most regimes. Before you use an听exception, you must听go to听section听3.1 of the听statutory guidance for听the听regime听to check it applies听in that regime.听

General exceptions听

Almost all听regimes include an exception to allow actions that a responsible officer has determined to be in the interests of national security, or听for听the prevention or detection of serious crime in the UK or elsewhere.听This exception can be used for any prohibition or requirement in the sanctions.听

Another exception allows听鈥榓uthorised conduct鈥�.听This exception听allows certain otherwise prohibited activities听if they are听authorised by听an appropriate licence听or other authorisation which is issued under the law of the Channel Islands, Isle of听Man听or any British Overseas Territory.听

Exceptions听to听financial sanctions听

There are听some听common听exceptions that听enable听certain听activities听under financial sanctions, including:听听

allowing the听crediting of a frozen account听with interest or other earnings,听where听the credited amount听must听also be frozen听听听
allowing听funds听to be made听available to a designated person,听if the payment听is听to a frozen account settling听an听obligation听that听arose before the recipient became a designated person听

There are more details about听common听exceptions in听section听6听of OFSI鈥檚 general guidance听鈥� see sections 6.1, 6.2, 6.3听and 6.4.听

To help听explain听the exceptions that apply to听specific restrictions on financial services and investments听under the Russia听sanctions听regime, OFSI has produced听Financial sanctions guidance for Russia.听

If you are unsure whether an exception applies in your circumstances,听you are advised to听seek independent legal advice.听听

Examples of exceptions to financial sanctions听

For individuals who were听designated听by听the听UK听Government听(rather than听only by the听UN), there is an exception that allows certain 鈥榬equired payments鈥� to be made from frozen accounts to certain UK public bodies and utilities. OFSI听has provided answers to听FAQs on the required payments exception.听

Other听specific听exceptions can apply听in particular regimes,听for example听to protect听basic human needs and recognise听humanitarian priorities.听These examples are not exhaustive and for the full conditions you need to refer to the regime鈥檚 statutory guidance.听听

Example: DPRK (North Korea) regime

Exceptions allow payments to sanctioned government organisations in respect of healthcare,听agriculture听and humanitarian purposes, among others.听

Example: All relevant regimes that have a purpose to听comply with听United Nations (UN)听obligations

An exception听(the 鈥楿N humanitarian exception)听allows activities听where financial sanctions might otherwise apply if they听are necessary to ensure the听timely听delivery of humanitarian听assistance听or to support basic human needs.听听

Conditions for听using听exceptions to financial sanctions听听

Exceptions often have听notification听requirements attached to their use, and听failing to听notify听may听in itself be听a civil or criminal offence and liable for a monetary penalty听or criminal conviction.听听

Other conditions for听using听exceptions include听keeping records. If you are not sure of the conditions for using an exception you must contact OFSI or seek independent legal advice.听

Exceptions听to听trade sanctions听

Some听regimes have exceptions that allow people to听move听goods听that would听otherwise听be subject to export sanctions,听as long as听these goods are:听

their personal effects, or听
of a non-commercial nature,听for their personal use and contained in their luggage, or听
necessary for the official purposes of a diplomatic mission or consular post, or of an international organisation enjoying immunities听in accordance with听international law听

If you are unsure whether an exception applies in your circumstances,听you are advised to听seek independent legal advice.听

Examples of exceptions to trade sanctions听

Specific听exceptions can apply听to sanctioned goods and services听in particular regimes, often to protect humanitarian priorities or address implications for businesses and for the UK and global economy. These examples are not exhaustive and for the full conditions you need to refer to the regime鈥檚 statutory guidance.听

Example: Russia regime

An exception allows legal advisory services to be provided where the purpose of those services is to determine whether an action (or proposed action) complies with Russia sanctions.听

Example: Belarus regime

An exception allows the export of machinery-related goods and technology for non-military use and for a non-military end-user, where this is necessary for humanitarian听assistance听activity, addressing health emergencies, or providing a response to natural disasters.听听

Exceptions for transport sanctions听

Transport sanctions are imposed under听4听regimes, and various exceptions can apply.听For the full conditions you need to refer to the regime鈥檚 statutory guidance.听

Example:听All听regimes where transport sanctions apply

Exceptions allow for the granting of access听to ship to enter听a听UK听port听in case of an emergency,听or听for听an听aircraft to land in the UK听if failing to land would endanger the lives of persons on board or the safety of the听aircraft.听

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If no exception applies, then the sanctioned activity is prohibited in its entirety. You may be able to use a licence to enable that activity, for example:听

allowing payments for basic needs from a bank account that is听frozen听because it is held by a designated person听听
exporting sanctioned goods for certain purposes, such as听humanitarian听assistance听听
providing financial services听for听bringing听fertilisers听subject to sanctions to听a third country听for听agricultural听use听

A licence is written permission for such activity.听A licensing body can:听听听

issue a licence for听general use听鈥� a 鈥榞eneral licence鈥櫶齖u003c/li>
issue individual licences in response to applications based on the licensing grounds听or licensing considerations听

Licensing grounds听and licensing considerations听

The government has听identified听that certain activities, prohibited under a听sanctions听regime,听may听be consistent with the purposes of the sanctions.听These pre-defined activities are known as licensing听grounds听or licensing听considerations.听听

If听you apply for an individual licence, you听may听need to听demonstrate听in your application how听the proposed activity听aligns with one, or more, of the听licensing听grounds听or considerations, and with the purpose of the sanctions.听

Example of licensing听consideration: Myanmar sanctions regime

The Myanmar sanctions prohibit the export, making available, transfer, supply or delivery of military goods and technology.听听

In relation to this prohibition, a licence may be granted for non-lethal military goods or technology if they are intended solely for humanitarian or protective use.听

General licences and how to use them听

In some cases听where there is a higher听demand for a certain licence,听the听responsible body听may have听issued听a听鈥榞eneral licence鈥�.听听

You can use a general licence without making a licence application.听General licences may be听amended,听revoked听or expire, so check the licence is valid.听Note that general licences often have reporting and record-keeping conditions, which are set out in full on the licence document.听

General licences for financial sanctions, issued by OFSI听

OFSI has issued听a听large number of听general licences听to听allow activities in certain circumstances that听would听normally听be prohibited听under financial sanctions.听Most of them听permit听certain payments or remittances from or to听frozen听accounts.听There are more details about general licences in听section 6.9听of OFSI鈥檚 general guidance.听

Example: interim听basic necessities听general听licence

For the first 2 months after a person is听designated听(or until an individual licence is issued听for them) certain payments to cover听basic necessities听are covered under a general licence, issued by OFSI.听

Example: payments to visa application service providers

A general licence allows for payments to authorised visa application services providers from a designated person (DP), or on behalf of a DP.听

听General licences for trade sanctions, issued by DBT

The Department for Business and Trade, has issued听general licences听that may authorise certain activities prohibited under the Russia sanctions.听Other听licensing requirements听may apply to your goods听as well.听听

Example:听trade听licence for acquisition of metals

罢丑别听Trade Licence for acquisition of metals听is a class licence, available for听general use听by:听

The London Metal Exchange (LME)听
LME听Clear Limited听
global metal exchange members,听and听听
clients of global metal exchange members听

Individual听sanctions licences: how to apply for and use them听

Before you apply for an individual听licence, check听that there is not:听

an听exception听that听applies听to the situation听
an OFSI听general licence that applies to the situation听
a听general听trade licence that applies to the situation听

If you听are unsure if听an exception or a general听or trade听licence听applies,听view the licensing guidance and then听contact the听appropriate licensing听body听as directed.听

Guidance on licence applications

Financial sanctions:听licensing guidance

OFSI has issued guidance on听licences that allow activity prohibited by financial sanctions.听Also read听OFSI鈥檚 blogposts:听听

Director disqualification sanctions: licensing guidance

The Insolvency Service has issued guidance on听licence applications听for directors subject to director disqualification sanctions.听

Trade sanctions: licensing guidance

DBT has three licensing teams responsible for administering licences on behalf of the Secretary of State. The team you need to apply through is dependent on the activity you want to carry out.听听听

DBT has produced guidance where you can check which trade licence you need. This will take you to the application page for each type.听

If you are carrying out activity that falls under the remit of more than one of DBT鈥檚 licensing teams, you will need to听submit听separate licence applications for each one.听听听

Transport sanctions: licensing guidance

The Department for Transport has issued guidance on听transport sanctions: apply for a licence.听

Overlap听between trade sanctions and financial sanctions听

Check if you need 2 licences for a trade activity听

Some activities are prohibited by both financial and trade sanctions. You should make sure you have the necessary licences to undertake activity that is subject to both financial and trade sanctions.听

Activities may be prohibited by both financial and trade sanctions if:听

sanctioned goods,听technology听or services are going to an individual or entity subject to financial sanctions (鈥榙esignated person鈥�)听
funds to pay for sanctioned goods, technology or services are transferring through or to an individual or entity subject to financial sanctions (designated person)听

Trade sanctions licences鈥痯ermit听prohibited activity under trade sanctions. If the trade involves an individual or entity subject to financial sanctions (designated person), you must check if an exception applies or听if you need a licence from OFSI.听听听

Exemptions for immigration sanctions听

In certain circumstances permissions may be granted by the UN听to allow travel which would otherwise be prohibited by a travel ban.听These are more usually called exemptions.听See听how exemptions apply to travel bans.听

Example: ISIL (Da鈥檈sh) and Al-Qaida sanctions regime

A person is not treated as an excluded person under Section 8B of the Immigration Act 1971 where entry or transit is necessary for the fulfilment of a judicial process or where the UN Committee听determines听on a听case by case听basis that the entry or transit is justified.听听听

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