UK sanctions guidance for Uzbek businesses

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Information about UK sanctions and relevant local laws to support compliance of non-UK businesses operating in Uzbekistan.

This guide is produced by the Foreign, Commonwealth and Development Office ( FCDO) to help businesses in Uzbekistan that are seeking to comply with UK sanctions.

This guide is general, so you should also refer to the relevant up-to-date legislation, including governmental decrees.

While every effort has been made to ensure the accuracy of the information in this guide, it does not constitute legal advice and cannot be relied upon as such. If you are unsure about your obligations in any given case, you should take independent legal advice.

This guide is specific to sanctions targeting Russia, but the UK has other sanctions regimes in place.

1. Aim of this guide

This guide is published by the UK government to help businesses in Uzbekistan to be aware of:

• restrictions in Uzbekistan’s national laws relevant to doing business with persons sanctioned by the UK and with Russia

• the risks of losing access to services and goods provided by UK and other international banks and suppliers. This may happen if they are concerned that you may be dealing with sanctioned persons or exporting sanctioned goods to Russia

• practical steps you can take to manage the risks of potentially severe disruption to your business

2. Context

The UK and its international partners have implemented sanctions on an unprecedented scale in response to Russia’s invasion of Ukraine. The UK has designated over 2,000 individuals and entities and has imposed wide-ranging restrictions on trade and economic activities involving Russia.

UK sanctions aim to:

• encourage Russia to cease activity which destabilises Ukraine or undermines its territorial integrity, sovereignty and independence and

• promote the payment of compensation by Russia for damage, loss or injury suffered by Ukraine since February 2022 as a result of Russia’s invasion

The UK government will keep these sanctions in place until these objectives have been achieved.

3. Why this matters to businesses in Uzbekistan

3.1. Circumvention of UK sanctions

Russia is going to great lengths to circumvent sanctions, and continues to procure Western military, dual-use, and other critical goods through third countries, including battlefield technologies. Russia relies on deceptive tactics, such as indirect shipping routes, falsification of the end-uses of goods, and professional evasion networks.

For example, in the context of Uzbekistan, this might include:

1. A firm in Uzbekistan may receive an order from a Russian importer for goods that are subject to UK sanctions and so cannot be obtained directly from the UK.

2. The Uzbek firm orders the goods from a UK supplier without informing them or others involved (such as banks, insurers, shippers) that the end-user of the goods is in Russia.

3. The UK supplier exports the goods to the Uzbek firm, which then re-exports them to Russia.

This type of practice and others like it constitute the circumvention of sanctions. These risks may affect all parties in a supply chain, irrespective of the form of their involvement or their size.

3.2. Who must comply with UK sanctions

UK sanctions are instruments of UK law. However a breach does not need to occur within UK borders for UK enforcement authority to be engaged. There simply has to be a connection to the UK, which we call a ‘UK nexus’.

UK sanctions apply to all persons within the territory and territorial sea of the UK, and to all UK persons wherever they are in the world. This means that individuals and legal entities who are within or undertake activities within the UK’s territory must comply with UK sanctions.

In addition, all UK nationals and legal entities established under UK law, including their branches must also comply with UK sanctions, wherever their activities take place. Other connections to the UK can also create a UK nexus. All cases will be fact dependent.

Throughout this guidance we refer to ‘UK Persons’, meaning those who must comply with UK Sanctions (what is stated about UK Persons will also apply to non-UK Persons who are within the territory or territorial sea of the UK).

UK Persons who breach UK sanctions may become liable to penalties or prosecution in the UK, potentially including severe fines. They are expected to have in place strong and effective measures for compliance, including ensuring that no goods or services that they supply to a third country are diverted to Russia or to sanctioned persons.

3.3. Risks for Uzbek businesses

However, while only UK Persons are legally obliged to comply with UK sanctions, non-UK persons who facilitate the circumvention of UK sanctions face certain risks, as follows.

3.3.1. You may be sanctioned

The UK may impose sanctions directly on you as an individual or on entities that you own or control if you are involved in activities that could contribute to Russia’s invasion of Ukraine, or which assist in the contravention or circumvention of certain UK sanctions. The UK has already imposed sanctions on this basis on businesses in a range of third countries that have been identified as engaged in activity which undermines the objectives of UK sanctions against Russia. This includes the designation of several entities based in Uzbekistan.

Even if you are not a UK Person, becoming subject to UK sanctions can have serious consequences for your business and other financial dealings. UK sanctions bind UK nationals and entities everywhere. Therefore, if you are designated by the UK, it will prevent UK nationals, businesses, and any other persons in the UK from providing you with access to the UK economy. In addition, many international businesses may voluntarily choose not to do business with you – behaviour often described as de-risking.

• all UK businesses must, and many international businesses may, refuse to conduct any business with you as well as with any entities that you own or control. This could mean that UK businesses refuse to supply goods to you, purchase goods from you, repair or service your equipment, or provide most professional and business services to you

• all UK banks must and many international banks may freeze any of your assets that they hold and would refuse to provide you with any services

• if insurance or shipping/ freight services are to be provided by UK firms, they will also refuse to take on your business if you or any of the other parties or goods concerned are sanctioned

3.3.2. You may be considered a high risk by UK suppliers

UK sanctions may impact your business if you do not take the requirements of UK sanctions into consideration within your own business operations.

This is particularly the case where UK persons are involved since they are required to ensure that their activities do not circumvent UK sanctions. If a UK company (including a UK bank) supplies you with goods or services, they will want to be assured that these will not be passed on to, or be for the benefit of, a UK-sanctioned person, or to Russia or to a ‘person connected with Russia’ if that would be in breach of UK sanctions. (A ‘person connected with Russia’ means an individual or a combination of individuals who are located or ordinarily resident in Russia, or an entity that is incorporated or constituted under the law of Russia, or domiciled in Russia.)

Accordingly, some UK companies may take a cautious approach (sometimes termed ‘de-risking’) and refuse to do business with you on the grounds that, for example:

• a sanctioned person holds a minority interest in your company
• you have links with sanctioned persons
• they have any other concerns that they are unable to resolve to their satisfaction
• they prefer to adopt a cautious approach on the basis of their internal policies

As a result, many UK Persons will decline to do business with you if you are unable to demonstrate that you have implemented effective measures to prevent any goods or services that you receive from them being sent to Russia or to a person connected with Russia. This may apply whether they are sent directly by you or indirectly by others in your supply chain. This could make it difficult for you to access, for example:

• components used in your manufacturing processes
• goods that you trade
• investment
• insurance
• banking
• financing
• debt servicing
• payments services
• foreign exchange services
• letters of credit
• servicing and spare parts for machinery

If UK persons are unable to resolve concerns to their satisfaction, they may also choose to halt trading with your business altogether, including the import of your goods to the UK.

In addition, it is possible that some non-UK businesses will refuse to do business with you if you are unable to demonstrate that you have taken UK sanctions into account. This is particularly the case with financial institutions, such as banks, which may refuse to process transactions which are at risk of breaching or undermining UK sanctions.

It is also important to note that the national laws of Uzbekistan may regulate some of the same activities that are prohibited by UK sanctions. They may restrict what can be exported or re-exported to Russia. Details on such laws in Uzbekistan are set out in Section 5.

4. Overview of UK sanctions on Russia

gov.uk