Tougher controls on legal professionals acting for sanctioned Russians 'criminalise a whole range of legal advice' City lawyers have warned in an urgent call for amendments and guidance. The 'severe unintended consequences' of the new regulation include banning the provision of legal advice to multinational companies seeking to ensure they are not breaching sanctions. This could ultimately increase the risk of non-compliance, the City of London Law Society has warned.  

The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2023, announced in June, were designed to extend existing regulations on Russian entities using UK legal professionals and to prevent legal professionals from advising international companies dealing with Russian businesses. Regulation 54D of the measures prohibits the provision of legal advisory services in connection with any activity which would be prohibited if done by a UK national or in the UK. 

In a draft submission, the City of London Law Society says that while it endorses the objective, the language of the new regulation goes 'far beyond' its stated aims 'and has created a problem for the legal services industry in the UK and beyond.' The UK legal sanctions are now 'significantly more onerous' than those applying in the US and EU, it states. 

The submission sets out illustrative examples where UK law firms asked to advise overseas non-Russian clients would find themselves committing criminal offences even when there is no UK nexus to the acitivity. Meanwhile in-house lawyers working for multinational companies would be barred from advising their employers on sanctions imposed by non-UK jurisdictions. This could ultimately increase the risk of non-compliance, the society observes. 

'Our member firms have reported multiple instances of these issues arising and creating problems,' it states. 'These problems will only grow as time goes on.'

A Law Society of England and Wales spokesperson said: 'The Law Society has been working closely with government and a group of sanctions compliance experts to address the workability of the government’s sanctions on Russia accessing UK legal expertise. We welcome the publication of a general licence and updated statutory guidance – but this is only a sticking plaster. Significant amendments are required to the original regulations to fully ensure sanctions compliance advice can be given and that legal professional privilege is protected.

'We are continuing to engage with government on the amendments needed and are hopeful of a speedy resolution.'

 

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