Sanctions: ripples offshore

The sanctions imposed by the European Union, the United Kingdom and the United States, among others, in the wake of Russia’s unjustified invasion of Ukraine have raised a number of issues for the British crown dependencies and overseas territories.

This article, originally published in R3 Recovery Magazine’s Summer 2022 edition, looks at the financial sanctions regimes applicable in the British Virgin Islands (BVI), the Cayman Islands, Guernsey and Jersey, and the key practical challenges currently being faced in those jurisdictions, including by IPs and those advising them. Due to the nature of business carried on in those jurisdictions, which are popular domiciles for investment funds due to their tax neutrality, the context in which issues have tended to arise are in relation to the ongoing management of investments that are subject to sanctions or in relation to distributions out of a fund which may be caught by sanctions. Issues have also arisen in relation to charging professional fees.