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Sanctions and Anti-Money Laundering Act 2018

Medico Legal

by James Watson and Gareth Minty

The Sanctions and Anti-Money Laundering Act 2018received Royal Assent on 23 May 2018. Prior to thisAct the UK's domestic sanctions regimes were confined to terrorism legislation. The Sanctions andMoney Laundering Act is therefore a significant pieceof legislation and represents a key aspect of the"Brexit legislation" which is required to plug a gapwhich had previously been filled by EU law. Whenthis Act comes into force, England and Wales willhave the power to impose sanctions independentlyof the international community.

The purpose of the sanctions

The Act is largely unchanged from the bill which hasbeen previously discussed.

Sanction regulations may be made where theMinister considers it appropriate to do so for either: the purposes of compliance with a UN obligation, the purposes of compliance with any other international obligation, or for a purpose stated withinsection 1(2) of the Act. These are, for example, if theappropriate Minister considers that carrying out thatpurpose would be in the interests of national securityor the interests of international peace and security.The full exhaustive list of what are collectivelyreferred to as "discretionary purposes" is set outwithin that section of the Act.

One addition since our last article is that a furtherdiscretionary purpose has been inserted to provide"accountability for or be a deterrent to gross violationsof human rights".

The test for imposing sanctions regulations

In the majority of situations, sanctions will be imposed where the Minister considers it appropriate inorder to comply with a UN Security Council Resolution or other international obligation.

However, where the sanctions are imposed for one ofthe discretionary purposes set out in the Act, thereare additional considerations that will apply when deciding whether it is appropriate to make these regulations.

The Minister may not decide that it is appropriate tomake regulations for any of the discretionary purposes unless he or she has considered whether:

there are good reasons to pursue that purpose andhas determined that there are, and

the imposition of sanctions is a reasonable courseof action for that purpose and has determined that it is.

Looking forward

Significant as this legislation is, it is unlikely that wewill see the UK issue sanctions unilaterally in the nearfuture. The operative provisions of the Act are notyet in force; this will happen via secondary legislationand the House of Lords debates indicate thetimetable for bringing in this legislation will be in linewith Brexit. Accordingly, until that process has beencompleted, UK sanctions will continue to mirror theEU level.

When the relevant sections of the Act do come intoforce this new domestic legislation will create an autonomous system, which will in theory permit the UKto diverge from the EU and the UN. While that maysound like an unlikely prospect at the time of writing,in recent months we have seen the US defy international opinion and take a contrary view on the Iranian Joint Comprehensive Plan of Action. On thatoccasion the UK government stood with the widerinternational community, however given these politically uncertain times it may be premature to simplyassume continued solidarity. Ultimately, whether theUK will ever diverge from the international community in terms of financial sanctions cannot be predicted with any certainty at this distance; what isnevertheless clear is that the Act creates the domesticframework for that to happen at least in principle,which makes this an important and noteworthy development.

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