On 24 April 2025, the UK introduced a new package of trade sanctions against Russia, pursuant to the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2025 (the “Amendments”). The Amendments have come into force immediately, and have been included as amendments to the main UK-Russia sanctions measure, the Russia (Sanctions) (EU Exit) Regulations 2019 (the “Regulations”).
This alert describes the key elements of the new UK sanctions package.
New Business Software Restrictions
The Amendments include new restrictions on the supply, to persons connected with Russia, of what the Amendments describe as “sectoral software and technology.” Consistent with other export controls measures in the Regulations, these new restrictions are accompanied by prohibitions on the provision of technology, technical assistance, financial services and funds, and brokering services in relation to sectoral software and technology. The restrictions extend to the provision of restricted software, technology, or services directly or indirectly to anyone in Russian territory; to persons who are ordinarily resident in Russia; to entities that are incorporated, constituted, or domiciled in Russia; or to any person or entity if intended for use in Russia.
The Amendments include a definition of “sectoral software and technology” in a new Schedule 3IA to the Regulations. Schedule 3IA includes three components: (1) business enterprise software, (2) industrial design software, and (3) oil and gas-related software. The business enterprise and industrial design software products captured in Schedule 3IA are broadly similar – although not fully identical – to lists of restricted software set out in the EU and U.S. sanctions against Russia, and capture the following:
Business Enterprise Software
(a) enterprise resource planning software;
(b) customer relationship management software;
(c) business intelligence software;
(d) supply chain management software;
(e) enterprise data warehouse software;
(f) computerised maintenance management systems;
(g) project management software;
(h) product lifecycle management software;
(i) any component of the software described in sub-paragraphs (a) to (h), including human resource, accounting or fleet management components;
(j) any other information comprised in the software described in sub-paragraphs (a) to (h); and
(k) technology required for the development, production or use of the software described in sub-paragraphs (a) to (h).
Industrial Design Software
(a) building information modelling software;
(b) computer aided design software;
(c) computer aided manufacture software;
(d) engineer to order software;
(e) any component of the software described in sub-paragraphs (a) to (d);
(f) any other information comprised in the software described in sub-paragraphs (a) to (d); and
(g) technology required for the development, production or use of the software described in paragraphs (a) to (d).
Schedule 3IA also includes new restrictions on the supply of certain energy sector software (including components thereof) and associated technology, including: (a) oil and gas exploration and oil and gas production software; (b) reservoir simulation software; (c) drilling and completion software; (d) software for oil and gas production management; (e) hydraulic fracturing design and analysis software; (f) any other information comprised in, or for use in, the foregoing software, including seismic analysis data or hydraulic fracturing data.
The foregoing restrictions are subject to an exemption, set out in Regulation 60DZA, covering the following:
- actions required to discharge UK statutory or regulatory obligations, subject to an obligation to notify the UK Government within 12 months; or
- actions undertaken, before 23 July 2025, “in satisfaction of an obligation arising under a contract” concluded before 23 April 2025, or “an ancillary contract necessary for the satisfaction of such a contract,” subject to a requirement to notify the government before 23 July 2025.
The second exemption effectively constitutes a three-month wind-down period, which should for example allow companies providing restricted software to their affiliates in Russia to continue providing that software on an interim basis (provided that the services are covered under a pre-existing intra-company agreement). That, in turn, would allow certain companies to seek specific licensing to provide the software in question to Russia over a longer timeframe. (The Government has amended its Russia sanctions licensing guidance to establish various scenarios where the Government will be willing to grant case-by-case licensing for sectoral software, including for example for companies focused on distribution of food and/or medical products in Russia.)
The foregoing restrictions are also subject to an exemption for software or technology that are of a “non-commercial nature or for personal use.”
The Government published online guidance concerning the new software restrictions, which includes the following general advice for complying with the new measures:
“The most effective means by which to comply with sectoral software measures will likely depend on the individual circumstances of the situation at hand. You may wish to consider:
- introducing clauses in contracts requiring additional controls to be implemented to ensure that restricted software and technology is treated in line with sanctions.
- introducing a “no-Russia clause” into contracts to ensure sanctioned sectoral software and technology is not made available to a person connected with Russia, to a place in Russia or for use in Russia.
- increasing data collection on the end users of sectoral software and technology to assess whether the provision of sectoral software and technology is subject to prohibition.
- assessing compliance in existing business practice – for example, the provision of relevant sectoral software and technology to subsidiaries in Russia[.]”
Amendments to Restricted Goods Lists
The Amendments make a number of changes to pre-existing lists of goods subject to export and/or import controls in relation to Russia, including the following:
- Schedules 2A, 3C, 3E and 3I have been amended to introduce new export-related restrictions in relation to a range of items, including for example all-terrain vehicles, certain lithium and polyethylene products, certain chemicals, certain electronic goods, and various industrial materials and equipment.
- Schedule 3DA has been amended to introduce controls on dealings in helium and helium-3 that originate in or had been exported from Russia. New controls also have been introduced in connection with dealings in Russian synthetic diamonds.
- The amendments remove certain specific items from the export-related restrictions in Schedules 3A, 3E, and 3I.These items are specified in Schedule 6 of the Amendments (in some cases, the removals are technical in nature, as the same products are covered under other schedules in the Regulations).
Expanded Technology Controls
Finally, the Amendments augment export-related restrictions previously in effect in connection with items set out in Schedules 3 (energy goods), 3E (so-called “G7 dependency” goods), and 3I (“Russia’s vulnerable” goods) by introducing express prohibitions on the supply of technology relating to those goods. For purposes of those restrictions, the term “technology” is defined in accordance with paragraph 37 of Schedule 1 to the UK Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”). (The use of that definition results in a minor variation in how the term “technology” is used in the Regulations, as pre-existing technology controls in relation to other aspects of the Regulations draw from definitions of “technology” in the UK export controls regulations. The UK export controls definitions of “technology” vary slightly from the SAMLA.)
Conclusion
The new Amendments represent a meaningful extension of the UK sanctions regime, and bring the UK-Russia sanctions closer in scope to the EU and U.S. sanctions (including, in particular, in relation to the new restrictions on business software). The Amendments also serve to highlight – together with other enhancements of the UK and EU sanctions enacted just two months ago (as summarized in this client alert) – the continued dedication on the part of the UK and EU authorities to their Russia sanctions programs, despite Russia’s efforts to seek the removal of international sanctions as a precondition to Russia’s cooperation in the ending of its war in Ukraine.
The EU authorities are, separately, reported to be in discussion concerning a new, 17th package of trade sanctions against Russia. The scope of those proposed measures remains unclear at present, but public reports indicate that they could include enhanced restrictions on dealings in the Russian nuclear sector.
* * *
Covington’s International Trade Controls team—which includes lawyers in the firm’s offices in the United States, London, and Frankfurt—regularly advises clients across business sectors, and is well-placed to provide support in connection with the evolving Russia sanctions and export controls. Our trade controls lawyers also work regularly with Covington's Global Public Policy team—consisting of over 120 former diplomats and policymakers in the United States, Europe, the Middle East, Latin America, Africa, and Asia—many of whom have had substantial government experience in sanctions and export controls matters, and who regularly advise our clients on emerging sanctions policy matters and related engagements with government stakeholders. Moreover, as the Ukraine crisis continues to unfold, Covington is exceptionally well-positioned to assist clients in navigating their most complex challenges, drawing on the multidisciplinary capabilities of additional practices in areas such as international arbitration and disputes, cybersecurity, anti-money laundering, insurance, and corporate restructuring.
If you have any questions concerning the developments discussed in this client alert, please contact any of the members of our International Trade Controls practice.
Back
