Overview of Bermuda Sanctions Regime
The UK’s sanctions related to Russia are implemented through the Russia (Sanctions) (EU Exit) Regulations 2019 (Sanctions Regulations) which were subject to several significant amendments in February and March 2022.
The Russia (Sanctions) (Overseas Territories) Order 2020 (OT Order) adopts the Sanctions Regulations with appropriate revisions to apply to British Overseas Territories.
The Bermuda International Sanctions Regulations 2013 (IS Regulations) have extended the OT Order to apply to Bermuda. The Sanctions Regulations referenced here are the amended version effected by the OT Order and IS Regulations.
The Sanctions Regulations apply to all individuals and legal entities who are incorporated or constituted under the laws of Bermuda and to those who are located in or undertake activities in Bermuda.
How have the Sanctions Regulations been expanded?
Amendments to the Sanctions Regulations have focused on the transportation sector, particularly aviation. This has resulted in a prohibition on the provision of insurance and reinsurance services relating to aviation and space goods, or aviation and space technology, to (i) a person connected with Russia or (ii) for use in Russia.
There is also a restriction on the provision of financial services or funds whose object or effect is directly or indirectly making restricted goods, which now includes marine vessels available (i) to a person connected with Russia or (ii) for use in Russia.
The UK issued a General Trade Licence in April 2022 authorising (subject to certain conditions) the direct or indirect provision of insurance and reinsurance services where:
(i) the “restricted good” is a vessel
(ii) the vessel is moving from a third country to Russia, or to the UK or a third country from Russia, or transiting Russian territorial waters or moving between two third countries
(iii) the vessel is moving under its own power
(iv) the movement of the vessel is not for the purpose of transfer of ownership or a change of operator and
(v) the insurance or reinsurance services are not being provided to a person connection with Russia.
As of the date of this briefing, the Bermuda authorities have not yet issued a Bermuda equivalent general trade licence. Therefore, marine insurers extending cover to vessels calling at Russian ports should carefully assess their sanction compliance.
What issues should businesses consider IN light of the extended sanctions regime?
The type of issues which must be considered (and which form the basis of many of our discussions with clients) include:
- How the UK sanctions apply in Bermuda and the differences in terms of application of general licences
- How to apply to the Financial Sanctions Implementation Unit for a specific licence under the Sanctions Regulations
- The nature and extent of the reporting obligations under the Sanctions Regulations
- How to safeguard against breaching sanctions
- The penalties for non-compliance
Appleby has an experienced, multi-disciplinary regulatory team which includes expert compliance professionals, as well as a team of lawyers across the corporate and dispute resolution practice areas. With expert advisors across a range of disciplines, we help clients navigate regulated environments throughout the lifecycle of their business.
Please contact a member of the team below if you have any questions regarding the impact of the Sanctions Regulations on your business.