Summary: This article explores the ramifications of UK sanctions on Russia for Indian businesses that engage directly or indirectly with sanctioned individuals or entities.
The enforcement of United Kingdom (“UK”) sanctions has created new challenges for global businesses, especially those involved in cross-border trade or regulated sectors. The implications extend well beyond compliance, as the recent prosecution underscores the need for vigilance when navigating international frameworks. For Indian businesses, the ongoing evolution of UK sanctions carries significant ramifications, requiring an acute awareness of both direct and indirect interactions with sanctioned individuals or entities.
From financial transactions to technology transfers, the scope of sanctions under the UK’s legal framework establishes measures intended to target support for Russia’s defense and military-industrial sectors. Indian companies must now assess their operational touchpoints, scrutinising areas such as logistics, microelectronics, and machinery supplies to ensure they are not inadvertently exposed to regulatory action. Furthermore, as the UK continues to expand its sanctions list, businesses must arm themselves with proactive strategies to mitigate risks and align with the evolving compliance standards.
The first-ever UK prosecution for breach of Russian linked financial sanctions (collectively referred to as “Sanctions against Russia”)[ii] were held recently where the former Russian official Dmitrii Ovsyannikov and Alexei Ovsyannikov (both nationals of Russia holding a Russian passport) were found guilty of breaching eight counts of financial sanctions and two counts of money laundering by the Southwark Crown Court.[iii]
The European Union (when United Kingdom was a member) had introduced certain financial sanctions against Russian linked or backed individuals, to encourage Russia to cease military action. Companies across jurisdictions – including the UK, China, Turkey, UAE, Israel, Kyrgyzstan, and others – were sanctioned under the Russia Regulations for their roles in supplying items such as microelectronics, logistics support, machine tools, and munitions to Russia’s defence and military-industry sectors.[iv]
The brief facts leading up to the prosecution are as follows.
In April 2025, Dmitrii Ovsyannikov and his brother Alexi were convicted for breaching UK financial sanctions and money laundering. Dmitrii, sanctioned since 2017 for his role in the Russian government, moved to London, opened a bank account, and received a large transfer from his wife, of £76,000. However, the bank subsequently realised he was on the UK sanctions list and froze the account.[v]
Law governing sanctions in the UK context
Sanctions and Anti-Money Laundering Act, 2018 (‘SAMLA’), was introduced in the backdrop of Brexit, which would enable the UK to continue to impose sanctions and to keep money laundering in check.[vi] The types of sanctions that could be imposed include financial,[vii] trade,[viii] shipping,[ix] aircrafts and more.[x] In addition to these broader sanctions, the recent The Russia (Sanctions) (EU Exit) (Amendment) Regulations, 2025, have implemented measures affecting additional categories. The supply, delivery, making available of the following goods, including chemicals, plastics, metals, machinery and electronics, are subject to sanctions. Furthermore, technological transfer too has been sanctioned.[xi]
These sanctions could be imposed against designated persons, and the powers related to ‘designation’ have been set out under §9-13.[xii] The definition of a “designated person” (‘DP’) under S.9 includes persons designated by an appropriate minister under any power provided under the regulations made in accordance with SAMLA.[xiii] Furthermore, a “person” under SAMLA includes “a person under this Act includes any individual, a body corporate, any organisation and any association of persons”.[xiv]
Particularly, with respect to financial sanctions, the powers provided include the power to freeze funds or economic resources owned, held or controlled by the DP, prevention of financial services to and from the DP.[xv]
All sanctions apply to conduct by UK persons[xvi], where that conduct is: (a) wholly or partly outside the UK, and (b) in the territorial sea adjacent to the UK.
In a recent development, the UK, through its Russia (Sanctions) (EU Exit) (Amendment (No. 3) Regulations, 2024,[xvii] has expanded the scope of its sanction’s regime. The amendment seeks to impose sanctions on inter alia persons and entities that provide financial services, or make available funds, economic resources, goods, or technology to persons who benefit from, or support the Russian government.[xviii]
To impose sanctions under the amended framework, authorities must have reasonable suspicion that an individual or entity qualifies as an “involved person” – that is such person must benefit from or support the Government of Russia.[xix] The inclusion of Regulations 6(4)(f) and 6(4)(m) notably widens the criteria for designation, now encompassing non-UK institutions, particularly foreign financial entities that assist in relevant transactions.[xx] This expansion reflects a strategic shift in the UK’s sanctions policy, providing a clear legal basis for targeting those who supply financial services, funds, economic assets, goods, or technological support to actors aligned with Russian state interests. The intent appears to be to empower the UK government to sanction foreign financial institutions, even those operating outside the UK jurisdiction, if they are found to facilitate transactions that benefit sectors identified as critical to the Russian government. [xxi]
It is pertinent to note that even though the UK Government has not declared these amending regulations as “secondary sanctions”, they may be seen to be in line with US secondary sanctions.
Although the extra-territorial application of SAMLA is limited to UK persons outside the UK,[xxii] the power to designate is extended to any person.[xxiii] Moreover, §47 (power to amend Part 1 to authorise additional sanctions) gives the appropriate minister the power to impose prohibitions or requirements of any kind, which are: – (a) not authorised by chapter 1,[xxiv] and (b) in line with the UN obligations or any other international obligations.[xxv] Furthermore, §47(2) allows for amending the scope of “sanctions regulations”.[xxvi]
Implications of these regulatory measures
A critical component would involve determining the commodity code classification under the UK trade control measures. Where the goods in question do not intersect with the scope of prohibited categories, the regulations provide for specific carve-outs.
A cumulative reading of the applicable SAMLA provisions, as well as the newly introduced Sanctions against Russia, showcases the power that the UK holds in designating Indian companies, particularly financial institutions, that are transacting with Russia, to be at the behest of the UK’s supposed secondary sanctions. Furthermore, §47 gives the UK government the power to go beyond the scope of SAMLA and impose sanctions in furtherance to its foreign policy objectives.
Nonetheless, international financial institutions with connections to Russia should reassess whether their current sanctions compliance frameworks are equipped to detect and manage the heightened risks arising from such exposure, especially in light of the changes introduced by the Amending Regulations.
For further information, please contact:
Sara Sundaram, Partner, Cyril Amarchand Mangaldas
sara.sundaram@cyrilshroff.com
[i] This alert is for informational purposes only and does not constitute legal advice.
[ii] “The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations, 2019, No. 855; https://www.gov.uk/government/collections/uk-sanctions-on-russia”
[iii] “CPS,Sentencing: The first ever UK prosecution of Russian sanction breaches, cps.gov.uk, (April 11, 2025), https://www.cps.gov.uk/cps/news/sentencing-first-ever-uk-prosecution-russian-sanction-breaches#:~:text=Dmitrii%20Ovsyannikov%2C%2048%2C%20and%20Alexei,suspended%20for%2015%20months%20respectively.”
[iv] “House of Commons, Sanctions against countries supporting Russia’s invasion of Ukraine, (January 17, 2025), https://researchbriefings.files.parliament.uk/documents/CBP-10048/CBP-10048.pdf.”
[v] “CPS,Sentencing: The first ever UK prosecution of Russian sanction breaches, cps.gov.uk, (April 11, 2025), https://www.cps.gov.uk/cps/news/sentencing-first-ever-uk-prosecution-russian-sanction-breaches#:~:text=Dmitrii%20Ovsyannikov%2C%2048%2C%20and%20Alexei,suspended%20for%2015%20months%20respectively.”
[vi] “Govt of UK, Policy Paper, Post-Legislative Scrutiny Memorandum: Sanctions and Anti-Money Laundering Act 2018, March 4, 2024, https://www.gov.uk/government/publications/post-legislative-scrutiny-memorandum-sanctions-and-anti-money-laundering-act-2018/post-legislative-scrutiny-memorandum-sanctions-and-anti-money-laundering-act-2018#background-and-objectives-of-samla.”
[vii] “Sanctions and Anti-Money Laundering Act 2018, §3, No. 13, Acts of Parliament, 2018 (United Kingdom).”
[viii] “Sanctions and Anti-Money Laundering Act 2018, §5, No. 13, Acts of Parliament, 2018 (United Kingdom).”
[ix] “Sanctions and Anti-Money Laundering Act 2018, §7, No. 13, Acts of Parliament, 2018 (United Kingdom).”
[x] “Sanctions and Anti-Money Laundering Act 2018, §6, No. 13, Acts of Parliament, 2018 (United Kingdom); Govt of UK, Policy Paper, Post-Legislative Scrutiny Memorandum: Sanctions and Anti-Money Laundering Act 2018, March 4, 2024, https://www.gov.uk/government/publications/post-legislative-scrutiny-memorandum-sanctions-and-anti-money-laundering-act-2018/post-legislative-scrutiny-memorandum-sanctions-and-anti-money-laundering-act-2018#background-and-objectives-of-samla.”
[xi] “Explanatory Memorandum to The Russia (Sanctions) (EU Exit) (Amendment) Regulations, 2025, No. 504.”
[xii] “Id.”
[xiii] “Sanctions and Anti-Money Laundering Act 2018, §9(2), No. 13, Acts of Parliament, 2018 (United Kingdom).
[xiv] “Id. at §9(5).”
[xv] “Sanctions and Anti-Money Laundering Act 2018, §3(1)(b) and §3(1)(c), No. 13, Acts of Parliament, 2018 (United Kingdom).”
[xvi] “Sanctions and Anti-Money Laundering Act 2018, §21(2), No. 13, Acts of Parliament, 2018 (United Kingdom).”
[xvii] “The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations, 2024, No. 834 (July 31, 2021).”
[xviii] “The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations, 2024, Regulation 6(4)(f), 2024, No. 834 (July 31, 2021); Ryan D. Junck, Jonathan Benson, Greg Seidner, Karolina A Kopczynska-Grobelny, UK Secondary Sanctions? The UK Broadens Its Designation Criteria To Target Foreign Persons With Exposure to the Russian Government and Military-Industrial Base, Skadden Publication (2024), https://www.skadden.com/-/media/files/publications/2024/09/uksecondarysanctionsukbroadensdesignationcriteriatotargetforeignpersonswexposuretorussiangovernmenta.pdf?rev=4035527ebeed47159043a02ffcf7001c.”
[xix] “Id. at §6(2)(a)(ii).”
[xx] “The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations, 2024, Regulation 6(4)(f) and 6(4A)(m), 2024 No. 834 (July 31, 2021); Explanatory note to the Russia (Sanctions) (EU Exit) (Amendment) (No 3) Regulations, 2024.”
[xxi] “Ryan D. Junck, Jonathan Benson, Greg Seidner, Karolina A Kopczynska-Grobelny, UK Secondary Sanctions? The UK Broadens Its Designation Criteria To Target Foreign Persons With Exposure to the Russian Government and Military-Industrial Base, Skadden Publication (2024), https://www.skadden.com/-/media/files/publications/2024/09/uksecondarysanctionsukbroadensdesignationcriteriatotargetforeignpersonswexposuretorussiangovernmenta.pdf?rev=4035527ebeed47159043a02ffcf7001c.”
[xxii] “Sanctions and Anti-Money Laundering Act 2018, §21(1) & (2), No. 13, Acts of Parliament, 2018 (United Kingdom).”
[xxiii] “Sanctions and Anti-Money Laundering Act 2018, §9(5), No. 13, Acts of Parliament, 2018 (United Kingdom).
[xxiv] “Sanctions and Anti-Money Laundering Act 2018, §47(1)(a), No. 13, Acts of Parliament, 2018 (United Kingdom).”
[xxv] “Id. at §47(1)(b).”
[xxvi] “Sanctions and Anti-Money Laundering Act 2018, § 47(2), No. 13, Acts of Parliament, 2018 (United Kingdom).”
