“64.— Treasury licences (1) The prohibitions in regulations 11 to 15 (asset-freeze etc.) … do not apply to anything done under the authority of a licence issued by the Treasury under this paragraph. … (2) The Treasury may issue a licence which authorises acts by a particular person only— (a) in the case of acts which would otherwise be prohibited by regulations 11 to 15, where the Treasury consider that it is appropriate to issue the licence for a purpose set out in Part 1 of Schedule 5…” (a) in the case of acts which would otherwise be prohibited by regulations 11 to 15, where the Treasury consider that it is appropriate to issue the licence for a purpose set out in Part 1 of Schedule 5…”
“1. Providing evidence when submitting your licence application. Appropriate evidence will vary based on what you are applying for. 2. Explain why the proposed activity is necessary. You may wish to explain what the outcome would be should you not receive a licence. 3. Where appropriate, consider obtaining quotes from more than one supplier to ensure that the fees can be demonstrated as reasonable and that you are receiving value for money. 4. If a quote is unable to be obtained, provide an evidence-based estimate. If you are a property management company looking to obtain a licence for a commercial building, you may wish to use quotes from similar-sized commercial buildings as evidence for reasonableness. 5. Provide a breakdown of the proposed payment/work. If you are requesting a licence to pay£100,000 for a change of windows, provide a breakdown of the payment – this could include the exact number of windows you are looking to change, cost of personnel and/or material etc. 6. If you are applying for a licence extension, you will be required to undergo the reasonableness assessment again. This may include reviewing your licence to ensure it is being used.”
“Framework for the “basic needs” licensing arrangements for oligarch designated persons (“DPs”) under the Russian sanctions regime … Urgent. OFSI has received a large number of licence applications from recently designated Russian oligarchs including applications with respect to their basic needs. Whilst some requests are excessive, we recognise that licences will be required to authorise payments for basic needs (e.g. food needs). We therefore require a response on the proposed framework in order to assess these applications on a consistent basis and issue licences as soon as possible. This submission covers the basic needs of sanctioned oligarchs and how OFSI will approach licensing such requests. Over the next few weeks, we recommend OFSI rejecting requests that would in essence allow oligarchs or affluent DPs to continue the luxurious lifestyle they enjoyed prior to sanctions and which do not fall within the ambit of basic needs. Instead, we recommend OFSI license core basic needs through a capped allowance, whilst separately licensing on a case-by-case basis high-expenditure applications.”
“Security 36. The licence applications received thus far have typically requested granting approval for significant security expenses (mainly staff). These would typically not be considered a basic need, however many oligarchs have legitimate fears for their safety. In this scenario, OFSI consider that the security would amount to a basic need. Rejecting reasonable and evidenced requests with respect to security could carry legal and reputational risk. Furthermore, it could result in the designated oligarchs being less likely to oppose the Russian regime if they feel their safety is compromised. Contingent on oligarchs providing evidence of the need for security, we recommend licensing their requests, subject to these being aligned with historic spending. Furthermore, where existing contracts are in place, OFSI will continue to consider such requests with respect to the prior obligations licensing ground. Staff (non-security) 37. The licence applications received thus far have typically requested OFSI license payments to the large number of staff that oligarchs employ, such as cooks, cleaners, assistants. OFSI do not think this fits within the basic needs derogation. We also believe granting these requests would be against the policy aims and lead to significant presentational risks. However, where existing contracts are in place and appropriate evidence is provided, OFSI will consider licensing such requests under the prior obligations derogation and in line with existing policy on this.”
“5. Completeness. An initial glance at the application form can provide an indication as to whether the applicant has provided enough information to begin processing the case. But, as you go through the case, you may identify further information that is missing. If the applicant has failed to identify whether a DP is involved or give the legal basis for the transaction, you will need to get this from them before proceeding further. You will always need to ask the applicant more questions on the specifics of their application later, but details like DP involvement, the legal basis and the payment route are basic pieces of information you need in order to get started.”
“2. Identify and consider the legal basis. Once you have read the application, you should have a good sense of what the DP/Applicant wishes to do and why they need a licence from OFSI. As one of the key aspects of the licence application, the legal basis merits particular scrutiny by the caseworker. There are 2 main things to check when considering the legal basis for each application: • The derogation: The Applicant must identify a legal basis, with specific reference to the appropriate derogation in the legislation • The argument: Merely stating “basic needs” is not enough – the Applicant must provide a robust argument as to why the derogation applies and, where possible, evidence to support this… ...Follow up questions... In almost all cases, you will need to ask the Applicant for more information before you can prepare a submission. It may help to write these as you go along so you don’t forget them.”
“173. Sixthly, OFSI’s exercise of what it termed its ‘residual discretion’ under Reg. 64(2) in refusing to license payment of the staff costs after22 December 2022 (disclosed only in the summary grounds of resistance to this claim) was undertaken unlawfully, by reference to an unpublished policy of preventing DPs from enjoying their ‘pre-designation lifestyle’. 174. The disclosed documents, the ‘Basic Needs Framework’ (May 2022) and the ‘Licensing Caseworker Guide’ (September 2022), and the internal licensing submission in relation to the Claimant’s application are described in paras …above. 175. OFSI’s reliance on this private policy in support of its decision to refuse ongoing staff payments was unlawful, for two reasons. 176. First, it offends against the well-established public law principle that policies relied upon by public bodies in their decision-making should be disclosed. It is well-established as a basic principle of administrative law that a policy used by a public body in its decision-making processes should be transparently disclosed or accessible. See [citation of cases including R (Lumba) v SSHD[2011] UKSC 12 [2012] 1 AC 245 at [34]]… More generally, it is also well-established that the obligation of good administration requires public bodies to deal straightforwardly and consistently with the public, and to act transparently: [citation of cases]…” 177. Secondly, even on its own terms, its application by OFSI to the circumstances of the Claimant’s case was irrational. It took into account irrelevant considerations, and by doing so, unduly fettered its own discretion. In particular: (1) The services performed by the staff do not support the Claimant’s “lifestyle”; rather they are necessary for the proper maintenance of Athlone House. OFSI’s assessment to the contrary (CW-1, pages 169-170) set an irrationally high standard to define ‘maintenance’ (apparently equating to services which “if not performed, could result in serious damage to the property and risk to life/environment”; and has in any event been shown by the Claimant’s additional evidence to have comprehensively misunderstood the maintenance needs (and attendant risks of neglect) arising in relation to a property such as Athlone House; (2) OFSI mis-applied its own policy as regards the need to curtail the “lifestyle” of “oligarchs”
“To explain how we arrived at the terms of the draft licence, it may be helpful to provide some background on the basic needs derogation. As our guidance makes clear, expenditure to meet basic needs of an individual should be expenses that are necessary to ensure that designated persons or their financially dependent family members are not imperilled. Basic needs licences do not necessarily enable a designated person to continue the lifestyle or business activities they had before they were designated.”
“Regulation 64 enables the Treasury and thus OFSI to grant a licence on one of these grounds, but does not require it to do so”
“The statutory language is that the MMO “may” make an order, and in the ordinary way that means that the MMO has a discretionary power, not a duty”); and R (Hargrave) v Stroud DC[2003] 1 P & CR 1 (CA): “the word “may” gives the authority a discretion, even in a case where the condition precedent is fulfilled, not to embark on the statutory process”
“73. … When it comes to the statutory threshold, the decision-maker must consider all the material or information known to him or ought to have been within his knowledge following reasonable inquiry… 81. It follows, in my judgment, that this Court cannot stand in the shoes of the Defendant when conducting this review exercise under section 38 of SAMLA. Instead, the Court's role is to examine whether the Defendant's decision was either based on no evidence or was irrational.”
“AHL will need to use this management fee to meet its core operating costs. This includes payments (to non-designated third parties) which AHL will need to make to enable AHL to provide the services to the DP that you have licensed in order to meet the DP’s basic needs and to maintain his economic resources. We understand that these costs include employers’ liability insurance and professional services.”
“To enable, by the use of a designated person's frozen funds or economic resources, the satisfaction of an obligation of that person (whether arising under a contract, other agreement or otherwise), provided that— (a) the obligation arose before the date on which the person became a designated person, and (b) no payments are made to another designated person, whether directly or indirectly.”
“OFSI have considered the request for staff within the context of the policy aims of the Russian Sanctions Regime. As stated in our Guidance, the aim of the regime is to encourage Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty, or independence of Ukraine. The Russian Sanctions Effectiveness Review which sought to outline the Foreign Secretary’s objectives in December 2022 further stated that “Designated Persons [should be] held to account for their actions directly or indirectly supporting the Russian war effort, and those actions are disrupted”
“Staff (non-security). The licence applications received thus far have typically requested OFSI license payments to the large number of staff that oligarchs employ, such as cooks, cleaners, assistants. OFSI do not think this fits within the basic needs derogation. We also believe granting these requests would be against the policy aims… and lead to significant presentational risks. However, where existing contracts are in place and appropriate evidence is provided, OFSI will consider licensing such requests under the prior obligations derogation and in line with existing policy on this.”
“OFSI recommends not licensing any further payments to these staff, including their discretionary bonuses. OFSI however accepts that some of these staff, who themselves are not designated, may have incurred economic loss as a result of providing their services to [DP] after his [DP’s] designation (even though this may be considered a breach of the UK Regulations). In recognising that these staff may be paid for the services already incurred, OFSI recommends licensing payment for these staff up to and including the point of decision (noting that OFSI does not license retrospectively), as well as any necessary contractual notice period, redundancy payments, and pension contributions, NICs, and other tax payments. OFSI believes that this will allow the DPs to “wind-down” their contracts and exit them in a managed way, ensuring that (a) both non-DPs receive funds owed, (b) Mikhail Fridman and his dependents can have a managed handover of knowledge and expertise from the staff and (c) OFSI’s licensing remains in line with the intention of the sanctions regime. This is consistent with the licensing decision in Licence INT/2022/2297993 where OFSI permitted arrears and redundancy payments for personal staff.”