UK's new human rights sanctions illustrate increasing global pressure for firms to police supply chains for ethical violations
The importance of human rights and robust human rights due diligence was underlined earlier this month, by the UK government’s introduction of the Global Human Rights Sanctions Regulations 2020 (the “Sanctions Regulations”). The Sanctions Regulations are the UK’s first autonomous sanctions regulations, imposed independently of either the United Nations or the EU, following the UK’s departure from the EU.
The Sanctions Regulations came into force on 6 July 2020 and introduce a ‘Magnitsky-style’ sanctions regime against 49 individuals and entities from Saudi Arabia, Russia, Myanmar and North Korea accused of involvement in several high profile human rights violations and abuses. They are similar to those in place in jurisdictions such as the United States and Canada, and are intended to deter, and provide accountability for, activities which amount to a serious violation of certain human rights, namely the right to life, the right to be free from torture and other cruel and degrading treatment, and the right to be free from slavery and forced labour. They impose an asset freeze, prohibiting UK persons from dealing with funds or economic resources owned, held or controlled by a designated person, or directly or indirectly making funds or economic resources available to or for the benefit of a designated person. Designated persons are now also prohibited from entering the UK.
As with all new designations, companies should check details of the designated persons list against their customers, suppliers and other counterparties (and their beneficial owners). Given that the majority of the newly announced designated persons already appear on the US Magnitsky sanctions list, it may well be the case that companies with any US sanctions exposure (particularly in relation to North Korea) are already avoiding dealings with these persons and related entities.
However, these latest sanctions form part of an increasing global trend of increased regulatory focus on supply chains in relation to a range of business conduct issues, including corruption, modern slavery, and other human rights violations. They also further underline the importance for businesses of robust human rights due diligence, not only as a responsible risk management and business sustainability strategy, but also as part of an effective sanctions compliance programme.
Human rights due diligence will also become more important in light of the various proposed mandatory human rights due diligence laws in Germany, Switzerland and the EU, in addition to the vigilance plans that many French companies already have to establish and implement.
To read more about the new Sanctions Regulations, see our detailed briefing here.