The Iraq (Sanctions) (EU Exit) Regulations 2020

Made: 7th July 2020

Laid before Parliament: 9th July 2020

Coming into force in accordance with regulation 1(2)

The Secretary of State , in exercise of the powers conferred by sections 1(1)(a) and (3)(a), 3(1)(a) and (d)(i), 5, 9(2)(b), 13, 15(2)(a), (2)(b), (3) and (6), 16, 17, 19, 20, 21(1), 54(1) and (2), 56(1) and 62(4) to (6) of, and paragraphs 2(b), 4(b), 5(a)(ii) and (b), 6(a)(ii) and (b), 13(h), (k), (l), (m) and (n), 16(a) and (b), 17(a), 20, 21 and 27 of Schedule 1 to, the Sanctions and Anti-Money Laundering Act 2018 , and having decided, upon consideration of the matters set out in section 56(1) of that Act, that it is appropriate to do so, makes the following Regulations:

PART 1 — General

Citation and commencement

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• (1) These Regulations may be cited as the Iraq (Sanctions) (EU Exit) Regulations 2020.

• (2) These Regulations come into force in accordance with regulations made by the Secretary of State under section 56 of the Act.

Interpretation

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In these Regulations—

• “the Act” means the Sanctions and Anti-Money Laundering Act 2018;

• “arrangement” includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable (but see paragraph 12 of Schedule 1 for the meaning of that term in that Schedule);

• “CEMA” means the Customs and Excise Management Act 1979 ;

• “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

• “the Committee” means the Committee of the Security Council established in accordance with paragraph 1 of resolution 1518;

• “conduct” includes acts and omissions;

• “document” includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include producing a copy of the information in legible form;

• “the EU Iraq Regulation” means Council Regulation (EC) No 1210/2003 of 7 July 2003, concerning certain specific restrictions on economic and financial relations with Iraq and repealing Regulation (EC) No 2465/96 , as it has effect in EU law;

• “resolution 661” means resolution 661 (1990) adopted by the Security Council on 6 August 1990;

• “resolution 1483” means resolution 1483 (2003) adopted by the Security Council on 22 May 2003;

• “resolution 1518” means resolution 1518 (2003) adopted by the Security Council on 24 November 2003;

• “resolution 1956” means resolution 1956 (2010) adopted by the Security Council on 15 December 2010;

• “trade licence” means a licence under regulation 36;

• “Treasury licence” means a licence under regulation 35(1);

• “United Kingdom person” has the same meaning as in section 21 of the Act.

Application of prohibitions and requirements outside the United Kingdom

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• (1) A United Kingdom person may contravene a relevant prohibition by conduct wholly or partly outside the United Kingdom.

• (2) Any person may contravene a relevant prohibition by conduct in the territorial sea.

• (3) In this regulation, a “relevant prohibition” means any prohibition imposed by—

• (a) Part 3 (Finance),

• (b) Part 4 (Trade), or

• (c) a condition of a Treasury licence or a trade licence.

• (4) A United Kingdom person may comply, or fail to comply, with a relevant requirement by conduct wholly or partly outside the United Kingdom.

• (5) Any person may comply, or fail to comply, with a relevant requirement by conduct in the territorial sea.

• (6) In this regulation, a “relevant requirement” means any requirement imposed—

• (a) by or under Part 6 (Information and records), or by reason of a request made under a power conferred by that Part, or

• (b) by a condition of a Treasury licence or a trade licence.

• (7) Nothing in this regulation is to be taken to prevent a relevant prohibition or a relevant requirement from applying to conduct (by any person) in the United Kingdom.

Purpose

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• (1) The purpose of the regulations contained in this instrument that are made under section 1 of the Act is compliance with the relevant UN obligations.

• (2) In this regulation, “the relevant UN obligations” means—

• (a) the obligation that the United Kingdom has by virtue of paragraph 23(a) of resolution 1483 (partial asset-freeze) to take the measures required by that provision in respect of persons for the time being named for the purposes of that provision by the Security Council or the Committee;

• (b) the obligation that the United Kingdom has by virtue of paragraph 23(b) of resolution 1483 (asset-freeze) to take the measures required by that provision in respect of persons for the time being named for the purposes of that provision by the Security Council or the Committee;

• (c) the obligations that the United Kingdom has by virtue of paragraph 23(b) of resolution 1483 in respect of persons—

• (i) acting on behalf of or at the direction of, or

• (ii) owned or controlled by,

the persons for the time being named by the Security Council or the Committee for the purposes of paragraph 23(b) of resolution 1483;

• (d) the obligations that the United Kingdom has by virtue of paragraph 3 of resolution 661 (arms embargo);

• (e) the obligations that the United Kingdom has by virtue of paragraph 7 of resolution 1483 (Iraqi cultural property).

PART 2 — Designation of persons

Designation of persons named by or under UN Security Council Resolutions

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• (1) Each person for the time being named by the Security Council or the Committee as a person referred to in paragraph 23(a) of resolution 1483 is a designated person for the purposes of regulation 8 (partial asset-freeze in relation to the former Government of Iraq and its state bodies, corporations or agencies) (whose purposes include compliance with the UN obligations mentioned in regulation 4(2)(a) ).

• (2) Each person for the time being named by the Security Council or the Committee as a person referred to in paragraph 23(b) of resolution 1483 is a designated person for the purposes of regulations 9 to 13 (asset-freeze etc. in relation to persons connected with the former Iraqi regime) (whose purposes include compliance with the UN obligations mentioned in regulation 4(2)(b)).

PART 3 — Finance

CHAPTER 1 — Interpretation

Meaning of “designated person” in Part 3

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• (1) In regulation 8 (partial asset-freeze in relation to the former Government of Iraq and its state bodies, corporations or agencies) a “designated person” means a person who is designated for the purposes of regulation 8 by reason of regulation 5(1).

• (2) In regulations 9 to 13 (asset-freeze etc. in relation to persons connected with the former Iraqi regime) a “designated person” means a person who is designated for the purposes of regulations 9 to 13 by reason of regulation 5(2).

Meaning of “owned or controlled directly or indirectly”

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• (1) A person who is not an individual (“C”) is “owned or controlled directly or indirectly” by another person (“P”) if either of the following two conditions is met (or both are met).

• (2) The first condition is that P—

• (a) holds directly or indirectly more than 50% of the shares in C,

• (b) holds directly or indirectly more than 50% of the voting rights in C, or

• (c) holds the right directly or indirectly to appoint or remove a majority of the board of directors of C.

• (3) Schedule 1 contains provision applying for the purpose of interpreting paragraph (2).

• (4) The second condition is that it is reasonable, having regard to all the circumstances, to expect that P would (if P chose to) be able, in most cases or in significant respects, by whatever means and whether directly or indirectly, to achieve the result that affairs of C are conducted in accordance with P's wishes.

CHAPTER 2 — Partial asset-freeze

Partial asset-freeze in relation to the former Government of Iraq and its state bodies, corporations or agencies

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• (1) A person (“P”) must not deal with relevant funds or economic resources owned, held or controlled by a designated person if P knows, or has reasonable cause to suspect, that P is dealing with such funds or economic resources.

• (2) Paragraph (1) is subject to Part 5 (Exceptions and licences).

• (3) A person who contravenes the prohibition in paragraph (1) commits an offence.

• (4) For the purposes of paragraph (1), “relevant funds or economic resources” are funds or economic resources which were located outside Iraq on 22 May 2003.

• (5) For the purposes of paragraph (1), a person “deals with” funds if the person—

• (a) uses, alters, moves, transfers or allows access to the funds,

• (b) deals with the funds in any other way that would result in any change in volume, amount, location, ownership, possession, character or destination, or

• (c) makes any other change, including portfolio management, that would enable use of the funds.

• (6) For the purposes of paragraph (1), a person “deals with” economic resources if the person—

• (a) exchanges the economic resources for funds, goods or services, or

• (b) uses the economic resources in exchange for funds, goods or services (whether by pledging them as security or otherwise).

• (7) The reference in paragraph (1) to funds or economic resources that are “owned, held or controlled” by a person—

• (a) includes, in particular, a reference to—

• (i) funds or economic resources in which the person has any legal or equitable interest, regardless of whether the interest is held jointly with any other person and regardless of whether any other person holds an interest in the funds or economic resources;

• (ii) any tangible property (other than real property), or bearer security, that is comprised in funds or economic resources and is in the possession of the person;

• (b) does not include funds or economic resources owned, held or controlled by a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person.

• (8) For the avoidance of doubt, the reference in paragraph (1) to a designated person includes P if P is a designated person.

CHAPTER 3 — Asset-freeze etc.

Asset-freeze in relation to persons connected with the former Iraqi regime

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• (1) A person (“P”) must not deal with relevant funds or economic resources owned, held or controlled by a designated person if P knows, or has reasonable cause to suspect, that P is dealing with such funds or economic resources.

• (2) Paragraph (1) is subject to Part 5 (Exceptions and licences).

• (3) A person who contravenes the prohibition in paragraph (1) commits an offence.

• (4) For the purposes of paragraph (1) a person “deals with” funds if the person—

• (a) uses, alters, moves, transfers or allows access to the funds,

• (b) deals with the funds in any other way that would result in any change in volume, amount, location, ownership, possession, character or destination, or

• (c) makes any other change, including portfolio management, that would enable use of the funds.

• (5) For the purposes of paragraph (1) a person “deals with” economic resources if the person—

• (a) exchanges the economic resources for funds, goods or services, or

• (b) uses the economic resources in exchange for funds, goods or services (whether by pledging them as security or otherwise).

• (6) The reference in paragraph (1) to funds or economic resources that are “owned, held or controlled” by a person includes, in particular, a reference to—

• (a) funds or economic resources in which the person has any legal or equitable interest, regardless of whether the interest is held jointly with any other person and regardless of whether any other person holds an interest in the funds or economic resources;

• (b) any tangible property (other than real property), or bearer security, that is comprised in funds or economic resources and is in the possession of the person.

• (7) For the purposes of paragraph (1), funds or economic resources are to be treated as owned, held or controlled by a designated person if they are owned, held or controlled by a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person.

• (8) For the avoidance of doubt, the reference in paragraph (1) to a designated person includes P if P is a designated person.

Making funds available to persons connected with the former Iraqi regime

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• (1) A person (“P”) must not make funds available directly or indirectly to a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available.

• (2) Paragraph (1) is subject to Part 5 (Exceptions and licences).

• (3) A person who contravenes the prohibition in paragraph (1) commits an offence.

• (4) The reference in paragraph (1) to making funds available indirectly to a designated person includes, in particular, a reference to making them available to a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person.

Making funds available for benefit of persons connected with the former Iraqi regime

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• (1) A person (“P”) must not make funds available to any person for the benefit of a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available.

• (2) Paragraph (1) is subject to Part 5 (Exceptions and licences).

• (3) A person who contravenes the prohibition in paragraph (1) commits an offence.

• (3A) The reference in paragraph (1) to making funds available to any person for the benefit of a designated person includes making funds available for the benefit of a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person (and references to designated person in paragraph (4) are to be read accordingly).

• (4) For the purposes of this regulation—

• (a) funds are made available for the benefit of a designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit, and

• (b) “financial benefit” includes the discharge (or partial discharge) of a financial obligation for which the designated person is wholly or partly responsible.

Making economic resources available to persons connected with the former Iraqi regime

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• (1) A person (“P”) must not make economic resources available directly or indirectly to a designated person if P knows, or has reasonable cause to suspect—

• (a) that P is making the economic resources so available, and

• (b) that the designated person would be likely to exchange the economic resources for, or use them in exchange for, funds, goods or services.

• (2) Paragraph (1) is subject to Part 5 (Exceptions and licences).

• (3) A person who contravenes the prohibition in paragraph (1) commits an offence.

• (4) The reference in paragraph (1) to making economic resources available indirectly to a designated person includes, in particular, a reference to making them available to a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person.

Making economic resources available for benefit of persons connected with the former Iraqi regime

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• (1) A person (“P”) must not make economic resources available to any person for the benefit of a designated person if P knows, or has reasonable cause to suspect, that P is making the economic resources so available.

• (2) Paragraph (1) is subject to Part 5 (Exceptions and licences).

• (3) A person who contravenes the prohibition in paragraph (1) commits an offence.

• (3A) The reference in paragraph (1) to making economic resources available to any person for the benefit of a designated person includes making economic resources available for the benefit of a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person (and references to designated person in paragraph (4) are to be read accordingly).

• (4) For the purposes of paragraph (1)—

• (a) economic resources are made available for the benefit of a designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit, and

• (b) “financial benefit” includes the discharge (or partial discharge) of a financial obligation for which the designated person is wholly or partly responsible.

CHAPTER 4 — Circumvention etc.

Circumventing etc. prohibitions

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• (1) A person must not intentionally participate in activities knowing that the object or effect of them is, whether directly or indirectly—

• (a) to circumvent any of the prohibitions in regulations 8 to 13 (partial asset-freeze and asset-freeze etc.), or

• (b) to enable or facilitate the contravention of any such prohibition.

• (2) A person who contravenes a prohibition in paragraph (1) commits an offence.

PART 4 — Trade

CHAPTER 1 — Interpretation

Definitions relating to goods and technology prohibited under this Part

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• (1) In this Part—

• “Illegally removed Iraqi cultural property” means Iraqi cultural property or any other item of archaeological, historical, cultural, rare scientific or religious importance illegally removed from any location in Iraq on or after 6 August 1990;

• “military goods” means—any thing for the time being specified in Schedule 2 to the Export Control Order 2008 , other than any thing which is military technology, andany tangible storage medium on which military technology is recorded or from which it can be derived;