18
Defeating Putin: the development, implementation and impact of economic sanctions on Russia
- lagged behind that available in the United States. The Government must, as a priority, ensure that its guidance is clear, precise and readily available, to allow the effective implementation of sanctions across the private sector.
- The Government is right to see economic sanctions as a critical weapon in resisting Putin’s war. As such the Government needs to consider increasing the Office of Financial Sanctions Implementation’s resources without delay and to provide surge capacity in the form of staff with appropriate expertise.
Sanctions evasion: Cryptocurrencies
- Following the imposition of financial sanctions on Russia, there was a concern that cryptocurrencies might be used to evade those sanctions. However, Mr Keatinge, while accepting that “we need to keep an eye on the crypto ball”, noted that “the volume of financial access that the Russian Government will need to evade sanctions is not something that the crypto sector could support.”[1] He went to add: “I am not convinced that, right now, [focusing on cryptocurrency] is a major determinant of our objective—which is to crush the Russian economy and make Vladimir Putin think again or make him unable to fund his military—or that it will change that calculation”.[2]
- On 11 March 2022, OFSI, the FCA and the Bank of England issued a joint statement
on sanctions and the cryptoasset sector, which included a reminder to firms that:
Financial sanctions regulations do not differentiate between cryptoassets and other forms of assets. The use of cryptoassets to circumvent economic sanctions is a criminal offence under the Money Laundering Regulations 2017 and regulations made under the Sanctions and Anti-Money Laundering Act 2018.[3]
- We welcome the reminder from the regulatory authorities to cryptoasset firms that cryptoassets are within the scope of the sanctions regime. We recommend that the Government take a watchful approach to how cryptocurrencies are used to potentially evade sanctions, and ensure it has the knowledge and expertise to effectively monitor developments in this area.
Secondary sanctions
- Secondary sanctions are intended to put pressure on third parties to stop them carrying out business with a sanctioned entity. If the third party fails to stop dealing with the sanctioned entity, it will also be cut off from the sanctioning country.[4]
- Witnesses noted the additional foreign policy concerns and economic costs that secondary sanctions might entail. Mr Keatinge explained that imposing secondary sanctions on third party countries who are “sitting on the fence at the moment” could “antagonise them” when “they clearly might play a role in resolving this conflict.”[5] When
- ↑ Q53
- ↑ Q58
- ↑ Office of Financial Sanctions Implementation, Bank of England, FCA, Joint Statement from UK Financial Regulatory Authorities on Sanctions and the Cryptoassets Sector, 11 March 2022, accessed 15 March 2022
- ↑ Atlantic Council, Secondary sanctions: A first glance, 6 February 2018, accessed 16 March 2022
- ↑ Q16
