Statutory guidance

Iraq sanctions: guidance

Updated 9 February 2023

As required by section 43 of the Sanctions and Anti-Money Laundering Act 2018 (‘the Sanctions Act’), the Secretary of State for Foreign, Commonwealth and Development Affairs has provided this guidance to assist in the implementation of, and compliance with, the Iraq (Sanctions) (EU Exit) Regulations 2020 (the ‘Regulations’), as amended from time to time.

As required by the Sanctions Act, this document contains guidance on the prohibitions and requirements imposed by the Regulations. It additionally provides guidance on best practice for complying with the prohibitions and requirements; the enforcement of them; and circumstances where they do not apply.

This document is intended to be read alongside more detailed sanctions guidance published by departments including the Department for International Trade (DIT) and HM Treasury, through the Office of Financial Sanctions Implementation (OFSI). This document contains links to those key sources of sanctions guidance, which will be regularly maintained and updated on GOV.UK. It is designed to give an overview of the prohibitions and requirements in the Regulations and, where appropriate, direct readers to further detailed guidance. This document is current on the date of publication.

1. Prohibitions and requirements imposed by the Iraq (Sanctions) (EU Exit) Regulations 2020

The Regulations impose financial and trade sanctions for the purpose of giving effect to the United Kingdom’s obligations under United Nations Security Council Resolutions 661 (1990) (‘UNSCR 661’) and 1483 (2003) (‘UNSCR 1483’).

In order to achieve the stated purpose, the Regulations impose a number of prohibitions and requirements. In order to enforce these, the Regulations establish penalties and offences, which are set out in detail in the corresponding report under section 18 of the Sanctions Act in relation to criminal offences.

The prohibitions and requirements imposed by the Regulations apply within the territory of the United Kingdom (UK) (including Northern Ireland) and in relation to the conduct of all UK persons wherever they are in the world. UK persons includes British nationals, as well as all bodies incorporated or constituted under the law of any part of the UK. Accordingly, the prohibitions and requirements imposed by the Regulations apply to all companies established in any part of the UK, and they also apply to branches of UK companies operating overseas.

The maritime enforcement powers contained in Part 8 of the Regulations apply in relation to British ships in international or foreign waters, ships without nationality in international waters and foreign ships in international waters.

It is prohibited to intentionally participate in any activities if you know that the object or effect of them is directly or indirectly to circumvent the prohibitions imposed by the Regulations or to enable or facilitate the contravention of those prohibitions.

If you are unclear about any aspect of the Regulations, in particular about whether action you are considering taking could contravene the Regulations, you are advised to seek independent legal advice.

Prohibitions and requirements for the financial and trade sanctions contained in the Regulations are set out below.

1.1 Designation of persons

The Regulations provide that each person for the time being named by the United Nations Security Council or Sanctions Committee as a person referred to in paragraph 23(a) of UNSCR 1483 is a designated person for the purposes of the partial asset-freeze in relation to the former Government of Iraq and its state bodies, corporations or agencies.

They also provide that each person for the time being named by the United Nations Security Council or Sanctions Committee as a person referred to in paragraph 23(b) of UNSCR 1483 is a designated person for the purposes of the asset freeze in relation to persons connected with the former Iraqi regime.

The UK Sanctions List lists the people designated under the Regulations, and details of the sanctions in respect of which they have been designated.

1.2 Financial sanctions

Asset freeze and making available provisions

The Regulations impose financial sanctions through a partial asset freeze on the former Government of Iraq and its state bodies, corporations or agencies, as well as an asset freeze in relation to persons connected with the former Iraqi regime. The partial asset freeze only applies to “relevant funds and economic resources” (as defined in the Regulations) owned, held or controlled by the Government of Iraq and its state bodies, corporations or agencies, i.e. those located outside Iraq on 22 May 2003. There are also prohibitions on making funds or economic resources available to persons connected with the former Iraqi regime.

These asset freezes and prohibitions involve the freezing of funds and economic resources (non-monetary assets, such as property or vehicles) of designated persons and ensuring that funds and economic resources are not made available to or for the benefit of designated persons, either directly or indirectly.

More information on financial sanctions can be found in the OFSI guidance.

OFSI is the authority responsible for implementing the UK’s financial sanctions on behalf of HM Treasury. OFSI helps to ensure that financial sanctions are properly understood, implemented and enforced in the UK. Further information on how OFSI implements financial sanctions can be found on the OFSI pages of GOV.UK.

1.3 Trade sanctions

The Regulations impose trade prohibitions relating to military goods and technology (as specified in Schedule 2 to the Export Control Order 2008).

There are circumstances (set out in the relevant lists of controlled items) in which certain items are not controlled, for example when body armour or a helmet is accompanying a person for that person’s own protection. Please check the relevant lists as applicable.

The Regulations also impose trade prohibitions relating to illegally removed cultural property. It is also prohibited for a person to provide associated brokering services.

Further detail on these trade prohibitions, including key terminology used, is explained below. Please have regard to the relevant legislation which contains full definitions of terms explained herein.

Export of goods

The concept of ‘export’ is set out in customs legislation, but is further detailed in Paragraph 32 of Schedule 1 to the Sanctions Act, which clarifies that “export” means export from the UK, but does not capture where goods are removed to the Isle of Man from the UK.

The export prohibition in the Regulations covers export to Iraq as well as exports that are for use in Iraq. This means that, even if the immediate destination is not Iraq, the prohibition may still apply. Exporters should check the ultimate end use of goods and may apply for a licence or contact the Export Control Joint Unit (ECJU) if they know or think the items may be used in Iraq.

Supply and delivery of goods

Supply and delivery prohibitions in the Regulations prohibit a person from directly or indirectly supplying or delivering goods from a third country to a place in Iraq. Regulation 18(4) specifies that a third country is a country that is not the UK, Isle of Man or Iraq.

Making goods and technology available

Prohibitions in the Regulations on making goods or technology available (e.g. through a sale) include directly or indirectly making them available for use in Iraq or to a person “connected with” Iraq. Regulation 16(4) sets out when a person is to be regarded as “connected with” Iraq (and this applies where the term is used in other trade prohibitions in this Part of the Regulations).

Transfer of technology

Prohibitions in the Regulations on the transfer of technology include transfer to a place in Iraq or a person “connected with” Iraq.

The term ‘transfer’ is defined in Paragraph 37 of Schedule 1 to the Sanctions Act, which states that it ‘means a transfer by any means (or combination of means), including oral communication and the transfer of goods on which the technology is recorded or from which it can be derived, other than the export of such goods.’

Where military technology is contained within a good, it would be classified as a military good under the accompanying goods-related provisions. This includes information contained on USB memory devices, laptops, tablets and the like.

Brokering services

The definition of ‘brokering services’ is set out in regulation 16, which states that it means any service to secure, or otherwise in relation to, an arrangement, including (but not limited to):

• the selection or introduction of persons as parties or potential parties to the arrangement
• the negotiation of the arrangement
• the facilitation of anything that enables the arrangement to be entered into, and
• the provision of any assistance that in any way promotes or facilitates the arrangement

The Regulations prohibit the direct or indirect provision of brokering services where they relate to specific arrangements. Those arrangements are set out in regulation 21.

Cultural property

The definition of “illegally removed Iraqi cultural property” is set out in regulation 15. The regulations prohibit the export and import and the direct or indirect supply, delivery, making available and acquisition of illegally removed Iraqi cultural property. They also prohibit the direct or indirect provision of financial services, funds or brokering services in connection with an arrangement whose object or effect is one of these prohibited acts. A person who holds or controls illegally removed Iraqi cultural property must secure its transfer to a constable.

DIT contact details

The Department for International Trade (DIT) has overall responsibility for trade sanctions licensing. For general guidance on export controls and trade sanctions, contact the Export Control Joint Unit:

email: exportcontrol.help@trade.gov.uk or tradesanctions@trade.gov.uk

helpline: +44 (0)20 7215 4594

For general guidance on import controls and trade sanctions contact the Import Controls team:

email: importcontrols@trade.gov.uk

The Department for Digital, Culture, Media and Sport has overall responsibility for cultural property policy. For general enquiries on cultural property issues, contact the DCMS Cultural Property Unit:

email: culturalpropertymailbox@dcms.gov.uk

It is not possible to get a trade sanctions licence for cultural property. For enquiries and guidance on export licences for cultural property, contact the Export Licensing Unit at Arts Council England:

email: elu@artscouncil.org.uk

1.4 Information and record keeping

For the purpose of the financial sanctions contained in the Regulations, Part 6 of the Regulations places obligations on relevant firms (the definition of which is set out in the Regulations) to report information to HM Treasury about known or suspected designated persons or about persons who may have committed an offence under specified provisions of the Regulations.

It also grants powers to HM Treasury to request information from, amongst others, a designated person, including powers to request the production of documents. It also establishes offences for failing to comply with these requests (including for providing false information).

Part 6 also establishes information powers and record-keeping responsibilities in relation to the trade sanctions contained in the Regulations. It provides for offences for failing to comply with any of those requirements or intentionally obstructing an official in the exercise of those powers.

If you have obligations or responsibilities under Part 6 of the Regulations, it is important that you familiarise yourself with them. If you are unclear of your obligations or responsibilities, you are advised to seek independent legal advice.

2. How will these sanctions measures be enforced?

The Regulations make it a criminal offence to contravene the trade and financial sanctions, as well as to enable or facilitate a contravention of, or to circumvent, any of the prohibitions in the Regulations. They also prescribe the mode of trial and penalties that apply to such offences. In some cases, offences related to contraventions of prohibitions in the Regulations are contained within other legislation, such as the Customs and Excise Management Act 1979 (CEMA).

In addition to the below, further details on offences and penalties can be found in the corresponding report under section 18 of the Sanctions Act.

2.1 Financial sanctions

Breaches of financial sanctions are a serious criminal offence. Any breach of the main financial prohibitions in the Regulations is an offence that is triable either way and carries a maximum sentence on indictment of 7 years’ imprisonment or a fine (or both).

Offences under regulations 40 or 44 (information offences in connection with financial sanctions under the Regulations) are summary offences only and carry a maximum sentence of 6 months’ imprisonment or a fine (which in Scotland or Northern Ireland may not exceed level 5 on the standard scale) or both.

OFSI is responsible for monitoring compliance with financial sanctions and for assessing suspected breaches. It also has the power to impose monetary penalties for breaches of financial sanctions and to refer cases to law enforcement agencies for investigation and potential prosecution.

OFSI works with other parts of government, supervisory bodies and regulators to consider all cases reported to it, sharing relevant information accordingly.

If you find out that a person or organisation you are dealing with is subject to the financial sanctions detailed in the Regulations, you must immediately:

• stop dealing with them
• freeze any assets you are holding for them
• inform OFSI as soon as possible by either emailing ofsi@hmtreasury.gov.uk or by calling their general enquiries line: +44 (0)20 7270 5454

More detailed information on OFSI’s approach to compliance and enforcement can be found in Chapter 7 of OFSI’s guidance.

2.2 Trade sanctions

Any breach of the trade sanctions prohibitions in the Regulations is triable either way and carries a maximum sentence on indictment of 10 years’ imprisonment or a fine (or both). Any breach of the trade licensing provisions is also triable either way and carries a maximum sentence on indictment of 2 years’ imprisonment or a fine (or both).

HM Revenue and Customs (HMRC) is responsible for enforcing the licensing restrictions and investigating suspected offences.

If you discover that you have breached any of the trade prohibitions or licensing provisions, you should report the irregularity to HMRC (sometimes known as ‘voluntary disclosure’) as soon as possible. If the irregularity was found in an Export Control Joint Unit compliance audit, the compliance inspector will have informed HMRC and you are strongly advised to do the same. Guidance is available on how to make a voluntary disclosure.

3. Are there circumstances when I can get an authorisation or licence for a sanctioned activity?

Licensing and exception provisions are contained in Part 5 of the Regulations.

3.1 Exceptions

The Regulations set out exceptions to some of the sanctions prohibitions which apply within certain defined circumstances. An exception applies automatically, and does not require you to obtain a licence issued in accordance with the Regulations. However, other types of licence, such as an export licence, might still be required.

The Regulations establish exceptions relating to financial sanctions. One such exception is for the crediting of a frozen or relevant account by a relevant institution. This applies to both the partial asset-freeze on the former Government of Iraq and its state bodies, corporations or agencies, as well as to the asset freeze in relation to persons connected with the former Iraqi regime. In respect of the asset freeze in relation to persons connected with the former Iraqi regime, any such interest or other earnings should be frozen in accordance with the relevant legislation underpinning the asset freeze.

An exception also exists to the asset freeze in relation to persons connected with the former Iraqi regime, to permit the transfer of funds to a frozen account in discharge (or partial discharge) of an obligation which arose before the recipient became a designated person.

The Regulations establish exceptions for the transfer of funds or economic resources owned, held or controlled by a designated person to the successor account to the Development Fund for Iraq, put in place by the Government of Iraq under the conditions set out in UNSCR 1483 and UNSCR 1956 (2010); and for the safe return of illegally removed Iraqi cultural property to Iraqi institutions, in accordance with the objectives of paragraph 7 of UNSCR 1483. An export licence may be required to return cultural property from the UK to Iraq.

Regulation 33 establishes an exception to regulations 8 to 13 and Chapters 2 and 3 of Part 4 (Trade) which provides that prohibitions are not contravened if conduct is authorised by a licence which is issued under the law of the Channel Islands, Isle of Man or any British Overseas Territory for the purpose of disapplying a prohibition in that jurisdiction which corresponds to the relevant prohibition.

There is an exception to regulations 8 to 13 in respect of “relevant activity” (being any activity which would otherwise be prohibited by regulations 8 to 13) which is necessary to ensure the timely delivery of humanitarian assistance or to support other activities that support basic human needs by:

(a) the United Nations, including its—

(i) programmes and funds,
(ii) other entities and bodies, and
(iii) specialised agencies and related organisations,

(b) international organisations,

(c) humanitarian organisations having observer status with the United Nations General Assembly and members of those humanitarian organisations,

(d) bilaterally or multilaterally funded non-governmental organisations participating in the United Nations Humanitarian Response Plans, Refugee Response Plans, other United Nations appeals, or humanitarian clusters coordinated by the United Nations Office for the Coordination of Humanitarian Affairs,

(e) any grantee, subsidiary, or implementing partner of any organisation falling within sub-paragraphs (a) to (d) while and to the extent that they are acting in those capacities (reference in the regulations to an organisation (or entity) includes reference to the employees of that organisation while acting in that capacity),

(f) any other persons authorised by the Committee for the purposes of resolution 2664.

This exception means the prohibitions of the asset freeze are not contravened by a person carrying out relevant activity which is necessary to ensure the timely delivery of humanitarian assistance or to carry out other activities that support basic human needs. This includes the provision, processing and payment of funds, other financial assets or economic resources, and the provision of goods and services necessary to ensure the timely delivery of such assistance or to support such activities.

The prohibitions of the asset freeze are not contravened where the person undertaking the relevant activity believes carrying it out is necessary to ensure the timely delivery of humanitarian assistance, or to carry out other activities that support basic human needs and there is no reasonable cause for them to suspect otherwise.

The Regulations also include an exception in relation to any prohibition or requirement imposed by the Regulations for actions which a responsible officer has determined to be in the interests of national security, or the prevention or detection of serious crime in the UK or elsewhere.

If you are unsure whether an exception applies in your circumstances, you are advised to seek independent legal advice.

3.2 Licensing for financial sanctions

Where a person is designated for the purposes of the financial sanctions (asset freeze measures and making available provisions) contained in the Regulations, the designated person or a representative (on their behalf) may apply for a licence from OFSI to use their funds or economic resources (non-monetary assets, such as property or vehicles) which have been frozen. Those designated as persons connected to the former Iraq regime or a representative (on their behalf) may also apply for a licence from OFSI to have funds and economic resources made available to them. Schedule 2 to the Regulations sets out the purposes pursuant to which, or for which activities, OFSI may grant an individual licence. In summary these are:

For persons connected to the former Iraq regime:

• payment to satisfy a judicial decision made before 22 May 2003
• basic needs
• reasonable professional fees for or reasonable expenses associated with the provision of legal services
• reasonable fees or service charges arising from the routine holding or maintenance of frozen funds or economic resources
• extraordinary expenses

Where a person is subject to the partial asset-freeze (the former Government of Iraq and its state bodies, corporations or agencies), the designated person or a representative (on their behalf) may apply for a licence from OFSI to use their funds or economic resources which have been frozen for the purpose set out in Schedule 2, namely:

• in respect of a payment to satisfy a judicial decision made before 22 May 2003

OFSI may need to notify, or in some cases seek approval from the relevant United Nations Sanctions Committee before issuing a licence. These requirements are set out in the relevant UN Security Council Resolutions. These requirements will lengthen the processing time for such licence applications and may in some cases prevent a licence from being issued.

Further information on exceptions and licensing grounds can be found in OFSI’s guidance.

Information on licence applications and the relevant form can be found on OFSI’s GOV.UK licensing webpage.

3.3 Licensing for trade sanctions

Licences may also be issued for certain trade activities that would otherwise be prohibited by the Regulations. The Department for International Trade (DIT) has overall responsibility for trade sanctions licensing. The Secretary of State for International Trade is ultimately responsible for decisions to grant or refuse a trade sanctions licence in any individual case.

The Export Control Joint Unit sits within DIT and is responsible for administering the licensing provisions on behalf of the Secretary of State for all trade sanctions, except those relating to imports which are administered by the DIT Import Licensing Branch. In exercising these powers, DIT seeks and considers advice from other government departments. There are no licensing provisions for cultural property; the only permitted exception to the sanctions is for the return of unlawfully removed items.

In making decisions on whether to grant a licence to permit something which would otherwise be prohibited under Part 5 of the Regulations, the Secretary of State will consider each application on a case-by-case basis to determine whether granting a licence would be consistent with the stated purposes of the sanctions regime and any UN or other relevant international law obligations.

For some prohibitions there are some specific activities that DIT considers are likely to be consistent with the aims of the sanctions. These are set out in the table below. If you think that your proposed activity falls within one of these specific descriptions you should make this clear and explain why you believe this to be the case in your application for a licence.

You should not assume that a licence will be granted or engage in any activities prohibited by trade sanctions until your licence has been granted.

Prohibition description	Prohibition reference	Considerations for licensing
Prohibitions on the export, making available, transfer, supply or delivery of military goods or military technology	17-20	A licence may be granted for the export, making available, transfer, supply, or delivery of military goods or military technology, other than items specified in paragraphs 8 and 12 of UNSCR 687 (1991) of 3 April 1991 or activities described in paragraph 3(f) of UNSCR 707 (1991) of 15 August 1991, if the goods or technology are required by the Government of Iraq or the multinational force in line with UNSCR 1546 (2004) of 8 June 2004 and other related resolutions or as otherwise permitted under the Written Ministerial Statement of 16 May 2019 as amended from time to time.
Prohibitions on the provision of brokering services relating to military goods or military technology	21	A licence may be granted for the provision of brokering services relating to military goods or military technology, other than items specified in paragraphs 8 and 12 of UNSCR 687 (1991) of 3 April 1991 or activities described in paragraph 3(f) of UNSCR 707 (1991) of 15 August 1991, if the brokering services are required by the Government of Iraq or the multinational force in line with UNSCR 1546 (2004) of 8 June 2004 and other related resolutions or as otherwise permitted under the Written Ministerial Statement of 16 May 2019 as amended from time to time.

Applications for trade sanctions licences can be made through SPIRE. Information on the activities you wish to carry out and any other relevant documentation can be provided in a cover letter and attached to the application. If you have questions on trade sanctions licensing, please contact us via tradesanctions@trade.gov.uk.

When you export goods, you may need to submit an electronic export declaration via the National Export System (NES), part of His Majesty’s Revenue and Customs’ (HMRC) Customs Handling of Import and Export Freight (CHIEF) system. Guidance is available on how to make an export declaration.

3.4 Overlap with strategic export licensing

Military goods and military technology

Please note that the export of and trade in military goods and military technology are also controlled under the Export Control Order 2008 and so you may also need a licence which is valid under that legislation.

This means that all licence applications relating to military goods and military technology will also need to be considered against the Strategic Export Licensing Criteria. A licence under the Regulations is unlikely to be granted if a licence is refused for the same activity under the Export Control Order 2008.

The way this will work in practice is that we will consider an application for a licence which relates to activities that are licensable under both the Regulations and the Export Control Order 2008 as an application under both pieces of legislation. This means that only a single licence application is required.

The application will be considered against the relevant licensing criteria. If a licence is granted it will be valid under both the Export Control Order 2008 and the Regulations.

Overlap between trade sanctions and financial sanctions

If you import or export goods, you need to consider if financial sanctions apply to you. You may need a licence from OFSI as well as from the Export Control Joint Unit or the Import Licensing Branch.

Transit control

Certain goods transiting the UK are still regarded as being exported when they leave the country and are therefore subject to control. Article 17 of the Export Control Order 2008 includes a transit and transhipment exception meaning that in many situations a licence is not required. This exception does not apply to goods destined for Iraq, meaning that a licence is required to transit goods through the UK or to tranship them in the UK with a view to re-exportation to Iraq.

4. Further information

Sign up to receive Notices to Exporters and view the Notices to Importers for updates on trade sanctions.

To receive an email alerting you to any changes to the consolidated list of financial sanctions targets, you can subscribe to OFSI’s e-alert.