Statutory guidance Iraq sanctions: guidance

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Guidance on the Iraq (Sanctions) (EU Exit) Regulations 2020

As required by section 43 of the Sanctions and Anti-Money Laundering Act 2018 (‘the Sanctions Act’), the Secretary of State for Foreign, Commonwealth and Development Affairs has provided this guidance to assist in the implementation of, and compliance with, the Iraq (Sanctions) (EU Exit) Regulations 2020 (the ‘Regulations’), as amended from time to time.

This document contains guidance on the prohibitions and requirements imposed by the Regulations. It additionally provides guidance on best practice for complying with the prohibitions and requirements, the enforcement of them, and circumstances where they do not apply.

The guidance is designed to give an overview of the prohibitions and requirements in the Regulations and, where appropriate, direct you to further detailed guidance to read alongside it. This document is current on the date of publication.

1. Prohibitions and requirements

The Regulations impose financial and trade sanctions for the purpose of giving effect to the United Kingdom’s obligations under United Nations Security Council Resolutions 661 (1990) (‘UNSCR 661’) and 1483 (2003) (‘UNSCR 1483’).

The prohibitions and requirements imposed by the Regulations apply within the territory of the United Kingdom (UK) (including Northern Ireland) and in relation to the conduct of all UK persons wherever they are in the world. UK persons includes British nationals, as well as all bodies incorporated or constituted under the law of any part of the UK. Accordingly, the prohibitions and requirements imposed by the Regulations apply to all companies established in any part of the UK, and they also apply to branches of UK companies operating overseas.

The maritime enforcement powers contained in Part 8 of the Regulations apply in relation to British ships in international or foreign waters, ships without nationality in international waters and foreign ships in international waters.

It is prohibited to intentionally participate in any activities if you know that the object or effect of them is directly or indirectly to circumvent the prohibitions imposed by the Regulations or to enable or facilitate the contravention of those prohibitions.

If you are unclear about any aspect of the Regulations, in particular about whether action you are considering taking could contravene the Regulations, you are advised to seek independent legal advice.

Prohibitions and requirements for the financial and trade sanctions contained in the Regulations are set out below.

1.1 Designation of persons

The Regulations provide that each person for the time being named by the United Nations Security Council or Sanctions Committee as a person referred to in paragraph 23(a) of UNSCR 1483 is a designated person for the purposes of the partial asset-freeze in relation to the former Government of Iraq and its state bodies, corporations or agencies.

They also provide that each person for the time being named by the United Nations Security Council or Sanctions Committee as a person referred to in paragraph 23(b) of UNSCR 1483 is a designated person for the purposes of the asset freeze in relation to persons connected with the former Iraqi regime.

The UK Sanctions List lists the people designated under the Regulations, and details of the sanctions in respect of which they have been designated.

1.2 Financial sanctions

Asset freeze and making available provisions

The Regulations impose financial sanctions through a partial asset freeze on the former Government of Iraq and its state bodies, corporations or agencies, as well as an asset freeze in relation to persons connected with the former Iraqi regime. The partial asset freeze only applies to “relevant funds and economic resources” (as defined in the Regulations) owned, held or controlled by the Government of Iraq and its state bodies, corporations or agencies, i.e. those located outside Iraq on 22 May 2003. There are also prohibitions on making funds or economic resources available to persons connected with the former Iraqi regime.

These asset freezes and prohibitions involve the freezing of funds and economic resources (non-monetary assets, such as property or vehicles) of designated persons and ensuring that funds and economic resources are not made available to or for the benefit of designated persons, either directly or indirectly.

These prohibitions also apply in relation to entities owned or controlled by a designated person.

The Office of Financial Sanctions Implementation ( OFSI) is the authority responsible for implementing the UK’s financial sanctions on behalf of HM Treasury. OFSI helps to ensure that financial sanctions are properly understood, implemented and enforced in the UK.

1.3 Trade sanctions

The Regulations impose trade prohibitions relating to military goods and technology (as specified in Schedule 2 to the Export Control Order 2008).

There are circumstances (set out in the relevant lists of controlled items) in which certain items are not controlled, for example when body armour or a helmet is accompanying a person for that person’s own protection. Please check the relevant lists as applicable.

The Regulations also impose trade prohibitions relating to illegally removed cultural property. It is also prohibited for a person to provide associated brokering services.

Further detail on these trade prohibitions, including key terminology used, is explained below. Please have regard to the relevant legislation which contains full definitions of terms explained herein.

Export of goods

The concept of ‘export’ is set out in customs legislation, but is further detailed in Paragraph 32 of Schedule 1 to the Sanctions Act, which clarifies that “export” means export from the UK, but does not capture where goods are removed to the Isle of Man from the UK.

The export prohibition in the Regulations covers export to Iraq as well as exports that are for use in Iraq. This means that, even if the immediate destination is not Iraq, the prohibition may still apply. Exporters should check the ultimate end use of goods and may apply for a licence or contact the Export Control Joint Unit ( ECJU) if they know or think the items may be used in Iraq.

Supply and delivery of goods

Supply and delivery prohibitions in the Regulations prohibit a person from directly or indirectly supplying or delivering goods from a third country to a place in Iraq. Regulation 18(4) specifies that a third country is a country that is not the UK, Isle of Man or Iraq.

Making goods and technology available

Prohibitions in the Regulations on making goods or technology available (e.g. through a sale) include directly or indirectly making them available for use in Iraq or to a person “connected with” Iraq. Regulation 16(4) sets out when a person is to be regarded as “connected with” Iraq (and this applies where the term is used in other trade prohibitions in this Part of the Regulations).

Transfer of technology

Prohibitions in the Regulations on the transfer of technology include transfer to a place in Iraq or a person “connected with” Iraq.

The term ‘transfer’ is defined in Paragraph 37 of Schedule 1 to the Sanctions Act, which states that it ‘means a transfer by any means (or combination of means), including oral communication and the transfer of goods on which the technology is recorded or from which it can be derived, other than the export of such goods.’

Where military technology is contained within a good, it would be classified as a military good under the accompanying goods-related provisions. This includes information contained on USB memory devices, laptops, tablets and the like.

Brokering services

The definition of ‘brokering services’ is set out in regulation 16, which states that it means any service to secure, or otherwise in relation to, an arrangement, including (but not limited to):

• the selection or introduction of persons as parties or potential parties to the arrangement
• the negotiation of the arrangement
• the facilitation of anything that enables the arrangement to be entered into, and
• the provision of any assistance that in any way promotes or facilitates the arrangement

The Regulations prohibit the direct or indirect provision of brokering services where they relate to specific arrangements. Those arrangements are set out in regulation 21.

Cultural property

The definition of “illegally removed Iraqi cultural property” is set out in regulation 15. The regulations prohibit the export and import and the direct or indirect supply, delivery, making available and acquisition of illegally removed Iraqi cultural property. They also prohibit the direct or indirect provision of financial services, funds or brokering services in connection with an arrangement whose object or effect is one of these prohibited acts. A person who holds or controls illegally removed Iraqi cultural property must secure its transfer to a constable.

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