On June 27, 2025, the UK Foreign, Commonwealth and Development Office (“FCDO“) published Sanctions Guidance for Non-UK Businesses (“Sanctions Guidance”).[1] The Sanctions Guidance is important for transactions involving the four countries that make up the United Kingdom: England, Scotland, Wales and Northern Ireland. The Sanctions Guidance serves as a roadmap to prevent breaches of the UK’s sanctions regime against Russia. It provides general information and practical compliance steps to help relevant parties better understand and adhere to the current sanctions regulations. However, this document does not constitute legal advice and expressly states that independent legal advice should always be sought in complex or uncertain cases.

1. An Overview of Russia-Related Sanctions Imposed by England, Scotland, Wales and Northern Ireland (the United Kingdom)

Since 2022, the UK has imposed multifaceted and comprehensive sanctions in response to Russia’s aggression against Ukraine. The main objectives of these sanctions are:

  • to encourage Russia to cease its military activities,
  • to end violations of Ukraine’s sovereignty and territorial integrity, and
  • to put pressure on Russia to compensate for the damage caused by the invasion.

To this end, the UK has placed more than 2,000 individuals and entities linked to commercial and economic activities involving Russia on its sanctions list (“Sanctions List”) and imposed extensive restrictions on them.

The sanctions are shaped by the Russia (Sanctions) (EU Exit) Regulations 2019[2] and other relevant legislation. This legislation focuses on two main elements in particular: asset freezing sanctions and trade restrictions on high-priority goods. While asset freezing sanctions prohibit access to the funds of individuals and organizations that supported the invasion of Ukraine, trade sanctions prohibit trade in critical products and technologies that contribute directly to Russia’s military activities.

In terms of trade sanctions, the UK has broadly limited its exports of goods and services to Russia. In particular, military, defense, security and dual-use products, energy sector products, luxury goods and critical industrial products are covered by sanctions. There are also severe restrictions on professional services (legal, accounting, consulting), financial services and maritime transportation to Russia.

 

Scenario: Risk for a Turkish Company Providing Aviation Insurance Services Related to Russia

ABC Insurance Inc., a company based in Turkey, obtains aviation reinsurance coverage from a UK-based reinsurer and uses this coverage for a cargo aircraft operated by its client, DEF Logistics Ltd.

DEF Logistics Ltd. uses the aircraft for transportation to Central Asian countries, with its flight route passing through Russian airspace. Occasionally, the aircraft refuels at airports in Russia and receives maintenance services there.

Case Assessment:

Under the Russia (Sanctions) (EU Exit) Regulations 2019:

  • It is prohibited to directly or indirectly provide insurance or reinsurance services related to aviation goods or technology to persons connected with Russia or for use in Russia when these services are provided from the UK.
  • In the event of a violation, ABC Insurance may be held liable. However, there is a defense available if that company can demonstrate that it did not know and had no reasonable cause to suspect that the person was connected with Russia or that the goods or technology were for use in Russia.

Compliance Risk:

  • It is unclear whether DEF Logistics’ activities fall under “use in Russia.”
  • ABC Insurance has not assessed whether the reinsurance coverage it receives from the UK is being used in connection with activities that may fall under the scope of the UK sanctions.

Necessary Actions:

  • Conduct a comprehensive compliance review of DEF Logistics’ flight routes, refueling and maintenance activities.
  • Assess whether the activities constitute “use in Russia” under UK sanctions.
  • If necessary, apply for a license from UK authorities or restructure the coverage arrangement.
  • Document all compliance review, assessment steps and decisions in writing for audit and legal defense purposes.

 

In addition, certain exemptions have been introduced in the implementation of sanctions for specific humanitarian activities and other special circumstances. However, the scope of these exceptions is very limited. In some cases, the UK government grants general and special licenses that exempt certain commercial activities. However, these licenses are limited in scope and do not automatically take effect. In cases where a license is required, legal assessment and an application process is required.

2. How can non-UK businesses be affected by these sanctions?

The sanctions are based on UK law and are binding on persons and entities based in the United Kingdom. However, in certain circumstances, these may extend to non-UK persons and transactions. The obligation to comply with sanctions extends to the following persons and entities:

  • UK Citizens: Persons who are nationals of the UK, are obliged to comply with the sanctions regardless of where they reside or operate. This includes UK citizen staff and directors of companies operating in third countries.
  • UK resident legal entities and their overseas branches: These entities are subject to the sanctions regime. Non-UK subsidiaries are only liable in the circumstances listed below.
  • Persons carrying out any part of their activities in the UK: For example, persons who travel to England, Scotland, Wales or Northern Ireland to meet with suppliers, negotiate contracts or sign contracts in these countries are liable to comply with the sanctions.
  • Purchasers of services from the UK: Those who purchase services from England, Scotland, Wales or Northern Ireland, such as insurance, banking or legal services, and benefit from these services abroad are also subject to sanctions.

Accordingly, Turkish businesses that are found to be linked to sanctioned individuals or entities may also face financial and trade restrictions. A company placed on the sanctions list loses access to UK markets, while UK companies and financial institutions are forced to stop doing business with them. This can have far-reaching consequences, such as preventing the supply of goods and services, not providing servicing and spare parts for equipment, and not providing insurance, banking and other financial services.

In addition, businesses that cannot demonstrate compliance with UK sanctions are at the risk of losing business partners and financial relationships not only in the UK but also internationally due to risk-aversion policies. While UK companies want to ensure that the goods and services they provide are not diverted to Russia or sanctioned persons, they may avoid working with businesses that cannot demonstrate compliance. Therefore, businesses in third countries must understand the scope of UK sanctions, check whether their business partners are on sanctions lists, and effectively implement risk-based compliance measures to sustain business operations and access to international financial relationships.

3. Compliance Program Steps to Manage Sanctions Risks

The Sanctions Guidance provides a comprehensive set of compliance recommendations for businesses seeking to mitigate sanctions risks. In order to avoid sanctions risks and ensure commercial sustainability, it is critical for companies to establish a living and effectively functioning sanctions compliance program that is appropriate to their business.

  • Risk Assessment : Each company is obliged to identify the risks that may arise from sanctions, taking into account its sector, field of activity, products and services. The structure of business partners and the supply chain, ultimate buyers and end-uses of goods should be examined to determine which processes may pose sanctions risks. This assessment should be observed not only during the initial set-up phase, but also by updating it whenever there are changes in the business model or areas of activity. Companies should conduct assessments that primarily focus on violations of domestic legal regulations. This assessment must consider the sector, product groups, customer profile and geographic markets in which the company operates. Additionally companies should assess transactions that may have negative consequences for future commercial opportunities, even if they do not directly violate the relevant legal regulations. This should include whether business partners and customers are on the Sanctions List, the behavior of other actors in the supply chain, and a detailed analysis of the financial processes involved in the supply of goods. The Sanctions Guidance also includes guidance on how to check whether a current or prospective partner or customer is on the Sanctions List.
  • Establishing a Sanctions Compliance Policy : A written sanctions compliance policy, supported by management commitment, is essential to clarify the company’s sanctions position and processes. This policy should include regular training programs for employees, identification of the duties and responsibilities of those responsible for compliance, and implementation of control mechanisms to mitigate sanctions risks in business processes. The policy should be kept up to date through regular reviews and integrated into internal processes to be effective in implementation.
  • Business Partner and Customer Screening Processes: Regularly checking the names, ownership structures and ultimate beneficiaries of existing and potential business partners, suppliers and customers against the UK Sanctions List is an essential part of compliance programs. These checks can be carried out manually or through automated screening systems. In cases of uncertainty, obtaining legal advice and conducting detailed investigations is an important step in minimizing the risk of sanctions.
  • Examination of Russian Connections It is necessary to examine whether partners and customers have connections with Russia. The commercial activity history of the persons or entities with whom business is conducted and their role in the supply chain should be evaluated to clarify whether there is an indirect risk of sanctions violation. While the fact that a partner or customer has ties to Russia does not necessarily mean that business should not be conducted with them, it is important to obtain clear information about their background, business practices and, in particular, the end use, end user and country of final destination of the goods supplied before working with them.
  • Contractual and Operational Safeguards : The effectiveness of a sanctions compliance program depends on taking concrete steps towards implementation. In this context, supply and sales contracts should include a commitment to sanctions compliance, end-user declarations should be obtained and transactions should be documented. This way, the company can concretely fulfill its obligation not to divert products or services to sanctioned countries or persons.

As UK sanctions are frequently updated, monitoring current developments, adapting company policies when necessary, and establishing internal control mechanisms are also essential steps for building and maintaining an effective compliance program. Finally, it should be remembered that documenting all efforts spent on establishing, maintaining, and implementing a compliance program will not only contribute to the management and improvement of the program but will also facilitate the management of potential risks.

4. What does the Sanctions Guidance Mean for Companies in Turkey ?

Trade volume between the UK and Turkey reached a historic high of £27.8 billion annually by 2024, making Turkey the UK’s 16th largest trading partner. The bidirectional increase observed in various sectors, particularly in the service sector, points to a growing economic interaction between the two countries.[3] These strong trade ties indicate that Turkish companies play an active role in trade and investment relations with the UK and therefore may be indirectly affected by the UK’s sanctions policies.

The volume of foreign trade between the United Kingdom and Turkey demonstrates the scale and importance of the commercial ties between the two countries and highlights the need for many companies in Turkey to closely monitor UK sanctions—even if these do not impose direct legal obligations in every case. For this reason, the Sanctions Guide serves as a roadmap for Turkish companies in terms of their compliance obligations. It is of considerable importance for companies in Turkey to pay attention to the recommendations provided in the Sanctions Guide and to take the necessary steps, as doing so is crucial for the continuity of their commercial activities and their compliance processes. Companies should seek independent legal advice when implementing these recommendations, particularly in complex or uncertain cases.

[1] https://www.gov.uk/guidance/uk-sanctions-guidance-for-non-uk-businesses

[2] https://www.legislation.gov.uk/uksi/2019/855/contents

[3] For detailed information on the mentioned statistics, see 2025-06-19 Turkey – UK Trade and Investment Factsheet

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