Lloyd's List is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call UK support at +44 (0)20 3377 3996 / APAC support at +65 6508 2430

Printed By

UsernamePublicRestriction

UK sanctions divergence may be headache for marine insurers

Post-Brexit UK sanctions are likely to increasingly differ from the US, representing an additional set of rules that must be applied

‘At the moment, we are not quite there yet, but there are areas of difference, and we have clients for whom we are keeping a watching eye on the UK position,’ says HFW partner

UK SANCTIONS are increasingly likely to diverge from those imposed by the European Union or the US, presenting marine insurers with an additional set of rules to stick to, an industry audience has been told.

The Sanctions and Money Laundering Act 2018 is the UK’s primary legislation, which sets the framework for autonomous sanctions.

Sitting underneath it are statutory instruments and secondary legislation that set out specific prohibitions for various country regimes.

“In a reinsurance context, the key change is not specifically the concern that the UK is adopting a different approach on sanctions,” HFW partner Daniel Martin told a webinar event organised by the shipping-oriented law firm as part of its Marine Insurance Week events.

“There is a contingent concern that the UK approach to sanctioned countries may begin to diverge from the EU and the US.”

In the situation where the UK sanctions different people, or different activities in different countries, it could potentially generate the problem of having to administer multiple sets of rules.

“At the moment, we are not quite there yet, but there are areas of difference, and we have clients for whom we are keeping a watching eye on the UK position.”

Essentially, in developing autonomous sanctions, the UK has adopted and continued EU sanctions, but rephrased the regulations in terminology that is more familiar to UK readers.

Some of the concepts have been expanded, and this includes the definition of ‘financial services’ under SAMLA, which now mean any service of a financial nature, specifically including insurance-related services.

The approach has deliberately been broad, to take in insurance, reinsurance and intermediation such as brokerage, agency and services auxiliary to insurance.

HFW has been involved in an application to the UK authorities for a licence related to insurance activities where that would not have been an obligation under EU rules.

There are also thematic measures targeting particular activities and behaviours such as terrorism, rather than specific jurisdictions.

This means that it is no longer possible to guarantee compliance by the straightforward expedient of simply not trading with sanctioned countries, as was possible until recently.

“What has changed with these new measures that target human rights abuses and corruption, is that it makes it much more difficult to apply a purely geographical focus,'' said Mr Martin.

Of country-specific sanctions, Russia continues to keep lawyers busy. It is a substantial market, in a way that third world countries are not.

Russia is also difficult to manage because lack of transparency can make it difficult to identify counterparties and those who sit behind counterparties.

Further measures against Belarus have been imposed in the past 10 days by the UK, the EU and Switzerland, targeting particular Belarusian individuals.

HFW has now reclassified the country as high rather than medium risk.

Insurers must also be aware of the risks when sanctions are gradually lifted rather than imposed.

“Rather than moving from a situation where on Friday everything is prohibited and on Monday everything is permitted, only certain things are permitted to start with,” he said. “Your assured may have heard that sanctions have been lifted and be very keen to rush into a market and insurers and lawyers are having to say, it is not quite like that at the moment.”

Related Content

Topics

UsernamePublicRestriction

Register

LL1137503

Ask The Analyst

Please Note: You can also Click below Link for Ask the Analyst
Ask The Analyst

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel