1. Finance
  2. The Sanctions (EU Exit) (Treasury Debt) Regulations 2025

The Sanctions (EU Exit) (Treasury Debt) Regulations 2025

Published: Thu 19th Jun 25

The Sanctions (EU Exit) (Treasury Debt) Regulations 2025 amend existing UK sanctions regulations concerning South Sudan, Central African Republic, Yemen, and Libya.

These amendments introduce exceptions to asset freezes and fund prohibitions imposed on UN-designated persons, allowing for the payment of Treasury debt owed to these individuals, provided certain conditions are met concerning the origin of the debt and the transfer of funds to a specified account.

The aim is to balance sanctions enforcement with the UK's financial obligations.

Arguments For

  • Intended benefits: The regulations ensure that the UK can continue to meet its financial obligations to UN-designated persons in relation to Treasury debt, preventing potential legal disputes and maintaining the UK’s credibility in international finance.

  • Legal/historical basis: The regulations operate under the Sanctions and Anti-Money Laundering Act 2018, reflecting a need to balance sanctions enforcement with the practicalities of financial obligations. The amendments are made in response to the UK's exit from the European Union.

  • Implementation methods: The regulations directly amend existing sanctions regulations by adding new exceptions that specify the conditions under which Treasury debt payments to sanctioned individuals are permitted.

  • Evidence cited: The Explanatory Note suggests that no significant impact on various sectors is foreseen, implying that the amendments effectively address a specific issue without wider negative consequences.

Arguments Against

  • Potential impacts: The exceptions could potentially be exploited to circumvent sanctions if not strictly enforced. There is a risk of creating loopholes that could facilitate financial support for sanctioned entities or individuals.

  • Implementation challenges: Ensuring that all relevant parties understand and comply with the intricate conditions and definitions in the regulations will require effective communication and regulatory oversight. This could place a burden on financial institutions.

  • Unintended effects: The exceptions may create inconsistencies in the application of sanctions across different relevant regulations or jurisdictions, making the entire sanctions system more complex and potentially less effective.

  • Alternative approaches: Alternative methods for addressing the UK's financial obligations to sanctioned entities could have been explored, such as escrow accounts or alternative payment mechanisms, which might minimize the risk of sanctions circumvention.

  1. Citation, commencement and extent (1) These Regulations may be cited as the Sanctions (EU Exit) (Treasury Debt) Regulations 2025 and come into force on 10th July 2025. (2) These Regulations extend to England and Wales, Scotland and Northern Ireland.
  1. Amendment of the South Sudan (Sanctions) (EU Exit) Regulations 2019 (1) The South Sudan (Sanctions) (EU Exit) Regulations 2019 are amended as follows. (2) After regulation 31ZZA (finance: exception from prohibitions for required payments) insert— “Finance: exceptions relating to payment of Treasury debt 31ZZB. (1) The prohibitions in regulations 12 to 14 (asset-freeze in relation to, and making funds available to, or for the benefit of, designated persons) are not contravened by any act done by a person to transfer funds to— (a) a UN designated person ("D") in order to satisfy an obligation owed by the Treasury to D in respect of Treasury debt where the conditions in paragraph (2) are met; or (b) a person ("B") in respect of Treasury debt where the effect of the transfer is to make funds available to or for the benefit of D and the conditions in paragraph (3) are met. (2) The person ("P") making the transfer of funds to D knows or has reasonable cause to suspect that the obligation referred to in paragraph (1) arose before the date on which D was designated and P takes reasonable steps to satisfy itself that the funds to be transferred to D are credited to a specified account. (3) The person ("P") making the transfer of funds to B knows or has reasonable cause to suspect that the effect of such a transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt and P takes reasonable steps to satisfy itself that such obligation arose before the date on which D was designated and the funds to be transferred to D are ultimately credited to a specified account. (4) The prohibitions in regulations 12 to 14 are not contravened by any act done by a person (where that person is not P in paragraph (2) or (3)) to enable a transfer of funds to any person in respect of Treasury debt— (a) in order to satisfy an obligation owed by the Treasury to D, or (b) where the effect of the transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt. (5) For the purposes of this regulation, references to a UN designated person, in so far as they relate to a designated person within the meaning of regulation 11, are to be read as including a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the UN designated person. (6) In this regulation— “corresponding non-UK country” means a non-UK country whose laws contain relevant— (a) prohibitions and exceptions corresponding to regulations 12 to 14 and regulation 31 (finance: exceptions from prohibitions); and (b) grounds for licences to be issued that correspond to the purposes in Schedule 2 (Treasury licences: purposes); “frozen account” has the meaning given in regulation 31(7); “non-UK country” means a country that is not the United Kingdom; “non-UK relevant institution” means— (a) a person, other than an individual, which would satisfy the threshold conditions for permission under Part 4A of the Financial Services and Markets Act 2000 if it had its registered office (or if it does not have one, its head office) in the United Kingdom, or (b) an undertaking which by way of business— (i) operates a currency exchange office, (ii) transmits money (or any representation of monetary value) by any means, or (iii) cashes cheques that are made payable to customers; “recognised CSD” has the meaning given in section 285(1)(e) of the Financial Services and Markets Act 2000; “relevant money market instrument” means an instrument of a kind normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers, excluding instruments of payment; “relevant transferable security” means a security, negotiable on the capital market, of any of the following kinds, but excluding instruments of payment— (a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares; (b) bonds or other forms of securitised debt, including depositary receipts in respect of such securities; (c) any other securities giving the right to purchase or sell any security of a kind mentioned in paragraph (a) or (b); “specified account” means— (a) a frozen account of a person; (b) an account held by or for the benefit of a person with a recognised CSD; (c) an account held by or for the benefit of a person with a non-UK relevant institution in a corresponding non-UK country; or (d) an account held by or for the benefit of a person with a third country CSD in a corresponding non-UK country— where the person referred to in (a) to (d) above is also D in paragraph (2) or (3); “third country CSD” has the meaning given in section 285(1)(g) of the Financial Services and Markets Act 2000; “Treasury debt” means any relevant transferable security, relevant money market instrument, loan or credit entered into or issued by, or on behalf of the Treasury in respect of funds borrowed by or on behalf of the Treasury; “UN designated person” has the meaning given in regulation 31ZZA(8).”. (3) In regulation 72(3) (transitional provisions: prior obligations)— (a) at the end of sub-paragraph (a) omit “and”; and (b) after sub-paragraph (a) insert—“(ba) regulation 31ZZB (finance: exceptions relating to payment of Treasury debt), and”.
  1. Amendment of the Central African Republic (Sanctions) (EU Exit) Regulations 2020 (1) The Central African Republic (Sanctions) (EU Exit) Regulations 2020 are amended as follows. (2) After regulation 31ZZA (finance: exception from prohibitions for required payments) insert— “Finance: exceptions relating to payment of Treasury debt 31ZZB. (1) The prohibitions in regulations 12 to 14 (asset-freeze in relation to, and making funds available to, or for the benefit of, designated persons) are not contravened by any act done by a person to transfer funds to— (a) a UN designated person ("D") in order to satisfy an obligation owed by the Treasury to D in respect of Treasury debt where the conditions in paragraph (2) are met; or (b) a person ("B") in respect of Treasury debt where the effect of the transfer is to make funds available to or for the benefit of D and the conditions in paragraph (3) are met. (2) The person ("P") making the transfer of funds to D knows or has reasonable cause to suspect that the obligation referred to in paragraph (1) arose before the date on which D was designated and P takes reasonable steps to satisfy itself that the funds to be transferred to D are credited to a specified account. (3) The person ("P") making the transfer of funds to B knows or has reasonable cause to suspect that the effect of such a transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt and P takes reasonable steps to satisfy itself that such obligation arose before the date on which D was designated and the funds to be transferred to D are ultimately credited to a specified account. (4) The prohibitions in regulations 12 to 14 are not contravened by any act done by a person (where that person is not P in paragraph (2) or (3)) to enable a transfer of funds to any person in respect of Treasury debt— (a) in order to satisfy an obligation owed by the Treasury to D, or (b) where the effect of the transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt. (5) For the purposes of this regulation, references to a UN designated person, in so far as they relate to a designated person within the meaning of regulation 11, are to be read as including a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the UN designated person. (6) In this regulation— “corresponding non-UK country” means a non-UK country whose laws contain relevant— (a) prohibitions and exceptions corresponding to regulations 12 to 14 and regulation 31 (finance: exceptions from prohibitions); and (b) grounds for licences to be issued that correspond to the purposes in Schedule 2 (Treasury licences: purposes); “frozen account” has the meaning given in regulation 31(7); “non-UK country” means a country that is not the United Kingdom; “non-UK relevant institution” means— (a) a person, other than an individual, which would satisfy the threshold conditions for permission under Part 4A of the Financial Services and Markets Act 2000 if it had its registered office (or if it does not have one, its head office) in the United Kingdom, or (b) an undertaking which by way of business— (i) operates a currency exchange office, (ii) transmits money (or any representation of monetary value) by any means, or (iii) cashes cheques that are made payable to customers; “recognised CSD” has the meaning given in section 285(1)(e) of the Financial Services and Markets Act 2000; “relevant money market instrument” means an instrument of a kind normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers, excluding instruments of payment; “relevant transferable security” means a security, negotiable on the capital market, of any of the following kinds, but excluding instruments of payment— (a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares; (b) bonds or other forms of securitised debt, including depositary receipts in respect of such securities; (c) any other securities giving the right to purchase or sell any security of a kind mentioned in paragraph (a) or (b); “specified account” means— (a) a frozen account of a person; (b) an account held by or for the benefit of a person with a recognised CSD; (c) an account held by or for the benefit of a person with a non-UK relevant institution in a corresponding non-UK country; or (d) an account held by or for the benefit of a person with a third country CSD in a corresponding non-UK country— where the person referred to in (a) to (d) above is also D in paragraph (2) or (3); “third country CSD” has the meaning given in section 285(1)(g) of the Financial Services and Markets Act 2000; “Treasury debt” means any relevant transferable security, relevant money market instrument, loan or credit entered into or issued by, or on behalf of the Treasury in respect of funds borrowed by or on behalf of the Treasury; “UN designated person” has the meaning given in regulation 31ZZA(8).”. (3) In regulation 72(3) (transitional provision: prior obligations)— (a) at the end of sub-paragraph (a) omit “and”; and (b) after sub-paragraph (a) insert—“(ba) regulation 31ZZB (finance: exceptions relating to payment of Treasury debt), and”.
  1. Amendment of the Yemen (Sanctions) (EU Exit) (No. 2) Regulations 2020 (1) The Yemen (Sanctions) (EU Exit) (No. 2) Regulations 2020 are amended as follows. (2) After regulation 30ZA (finance: exception from prohibitions for required payments) insert— “Finance: exceptions relating to payment of Treasury debt 30ZB. (1) The prohibitions in regulations 12 to 14 (asset-freeze in relation to, and making funds available to, or for the benefit of, designated persons) are not contravened by any act done by a person to transfer funds to— (a) a UN designated person ("D") in order to satisfy an obligation owed by the Treasury to D in respect of Treasury debt where the conditions in paragraph (2) are met; or (b) a person ("B") in respect of Treasury debt where the effect of the transfer is to make funds available to or for the benefit of D and the conditions in paragraph (3) are met. (2) The person ("P") making the transfer of funds to D knows or has reasonable cause to suspect that the obligation referred to in paragraph (1) arose before the date on which D was designated and P takes reasonable steps to satisfy itself that the funds to be transferred to D are credited to a specified account. (3) The person ("P") making the transfer of funds to B knows or has reasonable cause to suspect that the effect of such a transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt and P takes reasonable steps to satisfy itself that such obligation arose before the date on which D was designated and the funds to be transferred to D are ultimately credited to a specified account. (4) The prohibitions in regulations 12 to 14 are not contravened by any act done by a person (where that person is not P in paragraph (2) or (3)) to enable a transfer of funds to any person in respect of Treasury debt— (a) in order to satisfy an obligation owed by the Treasury to D, or (b) where the effect of the transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt. (5) For the purposes of this regulation, references to a UN designated person, in so far as they relate to a designated person within the meaning of regulation 11, are to be read as including a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the UN designated person. (6) In this regulation— “corresponding non-UK country” means a non-UK country whose laws contain relevant— (a) prohibitions and exceptions corresponding to regulations 12 to 14 and regulation 30 (finance: exceptions from prohibitions); and (b) grounds for licences to be issued that correspond to the purposes in Schedule 2 (Treasury licences: purposes); “frozen account” has the meaning given in regulation 30(7); “non-UK country” means a country that is not the United Kingdom; “non-UK relevant institution” means— (a) a person, other than an individual, which would satisfy the threshold conditions for permission under Part 4A of the Financial Services and Markets Act 2000 if it had its registered office (or if it does not have one, its head office) in the United Kingdom, or (b) an undertaking which by way of business— (i) operates a currency exchange office, (ii) transmits money (or any representation of monetary value) by any means, or (iii) cashes cheques that are made payable to customers; “recognised CSD” has the meaning given in section 285(1)(e) of the Financial Services and Markets Act 2000; “relevant money market instrument” means an instrument of a kind normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers, excluding instruments of payment; “relevant transferable security” means a security, negotiable on the capital market, of any of the following kinds, but excluding instruments of payment— (a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares; (b) bonds or other forms of securitised debt, including depositary receipts in respect of such securities; (c) any other securities giving the right to purchase or sell any security of a kind mentioned in paragraph (a) or (b); “specified account” means— (a) a frozen account of a person; (b) an account held by or for the benefit of a person with a recognised CSD; (c) an account held by or for the benefit of a person with a non-UK relevant institution in a corresponding non-UK country; or (d) an account held by or for the benefit of a person with a third country CSD in a corresponding non-UK country— where the person referred to in (a) to (d) above is also D in paragraph (2) or (3); “third country CSD” has the meaning given in section 285(1)(g) of the Financial Services and Markets Act 2000; “Treasury debt” means any relevant transferable security, relevant money market instrument, loan or credit entered into or issued by, or on behalf of the Treasury in respect of funds borrowed by or on behalf of the Treasury; “UN designated person” has the meaning given in regulation 30ZA(8).”. (3) In regulation 71(3) (transitional provision: prior obligations)— (a) at the end of sub-paragraph (a) omit “and”; and (b) after sub-paragraph (a) insert—“(ba) regulation 30ZB (finance: exceptions relating to payment of Treasury debt), and”.
  1. Amendment of the Libya (Sanctions) (EU Exit) Regulations 2020 (1) The Libya (Sanctions) (EU Exit) Regulations 2020 are amended as follows. (2) After regulation 43ZA (finance: exception from prohibitions for required payments) insert— “Finance: exceptions relating to payment of Treasury debt 43ZB. (1) The prohibitions in regulations 12 to 14 (asset-freeze in relation to, and making funds available to, or for the benefit of, designated persons) and regulations 18 to 20 (partial asset-freeze and making funds available to or for benefit of designated persons) are not contravened by any act done by a person to transfer funds to— (a) a UN designated person ("D") in order to satisfy an obligation owed by the Treasury to D in respect of Treasury debt where the conditions in paragraph (2) are met; or (b) a person ("B") in respect of Treasury debt where the effect of the transfer is to make funds available to or for the benefit of D and the conditions in paragraph (3) are met. (2) The person ("P") making the transfer of funds to D knows or has reasonable cause to suspect that the obligation referred to in paragraph (1) arose before the date on which D was designated and P takes reasonable steps to satisfy itself that the funds to be transferred to D are credited to a specified account. (3) The person ("P") making the transfer of funds to B knows or has reasonable cause to suspect that the effect of such a transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt and P takes reasonable steps to satisfy itself that such obligation arose before the date on which D was designated and the funds to be transferred to D are ultimately credited to a specified account. (4) The prohibitions in regulations 12 to 14 and regulations 18 to 20 are not contravened by any act done by a person (where that person is not P in paragraph (2) or (3)) to enable a transfer of funds to any person in respect of Treasury debt— (a) in order to satisfy an obligation owed by the Treasury to D, or (b) where the effect of the transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt. (5) For the purposes of this regulation, references to a UN designated person, in so far as they relate to a designated person within the meaning of regulation 11 or 17, are to be read as including a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the UN designated person. (6) In this regulation— “corresponding non-UK country” means a non-UK country whose laws contain relevant— (a) prohibitions and exceptions corresponding to regulations 12 to 14, 18 to 20 and regulation 43 (finance: exceptions from prohibitions); and (b) grounds for licences to be issued that correspond to the purposes in Schedule 4 (Treasury licences: purposes); “frozen account” has the meaning given in regulation 43(7); “non-UK country” means a country that is not the United Kingdom; “non-UK relevant institution” means— (a) a person, other than an individual, which would satisfy the threshold conditions for permission under Part 4A of the Financial Services and Markets Act 2000 if it had its registered office (or if it does not have one, its head office) in the United Kingdom, or (b) an undertaking which by way of business— (i) operates a currency exchange office, (ii) transmits money (or any representation of monetary value) by any means, or (iii) cashes cheques that are made payable to customers; “recognised CSD” has the meaning given in section 285(1)(e) of the Financial Services and Markets Act 2000; “relevant account” has the meaning given in regulation 43(7); “relevant money market instrument” means an instrument of a kind normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers, excluding instruments of payment; “relevant transferable security” means a security, negotiable on the capital market, of any of the following kinds, but excluding instruments of payment— (a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares; (b) bonds or other forms of securitised debt, including depositary receipts in respect of such securities; (c) any other securities giving the right to purchase or sell any security of a kind mentioned in paragraph (a) or (b); “specified account” means— (a) a frozen account or a relevant account of a person; (b) an account held by or for the benefit of a person with a recognised CSD; (c) an account held by or for the benefit of a person with a non-UK relevant institution in a corresponding non-UK country; or (d) an account held by or for the benefit of a person with a third country CSD in a corresponding non-UK country— where the person referred to in (a) to (d) above is also D in paragraph (2) or (3); “third country CSD” has the meaning given in section 285(1)(g) of the Financial Services and Markets Act 2000; “Treasury debt” means any relevant transferable security, relevant money market instrument, loan or credit entered into or issued by, or on behalf of the Treasury in respect of funds borrowed by or on behalf of the Treasury; “UN designated person” has the meaning given in regulation 43ZA(8).”. (3) In regulation 89(3) (transitional provision: prior obligations etc.)— (a) at the end of sub-paragraph (b) omit “and”; and (b) after sub-paragraph (b) insert—“(ba) regulation 43ZB (finance: exceptions relating to payment of Treasury debt), and”.
  1. Amendment of the Haiti (Sanctions) Regulations 2022 After regulation 25 (finance: exceptions from prohibitions) of the Haiti (Sanctions) Regulations 2022 insert— “Finance: exceptions relating to payment of Treasury debt 25A. (1) The prohibitions in regulations 8 to 10 (asset-freeze in relation to, and making funds available to, or for the benefit of, designated persons) are not contravened by any act done by a person to transfer funds to— (a) a designated person ("D") in order to satisfy an obligation owed by the Treasury to D in respect of Treasury debt where the conditions in paragraph (2) are met; or (b) a person ("B") in respect of Treasury debt where the effect of the transfer is to make funds available to or for the benefit of D and the conditions in paragraph (3) are met. (2) The person ("P") making the transfer of funds to D knows or has reasonable cause to suspect that the obligation referred to in paragraph (1) arose before the date on which D was designated and P takes reasonable steps to satisfy itself that the funds to be transferred to D are credited to a specified account. (3) The person ("P") making the transfer of funds to B knows or has reasonable cause to suspect that the effect of such a transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt and P takes reasonable steps to satisfy itself that such obligation arose before the date on which D was designated and the funds to be transferred to D are ultimately credited to a specified account. (4) The prohibitions in regulations 8 to 10 are not contravened by any act done by a person (where that person is not P in paragraph (2) or (3)) to enable a transfer of funds to any person in respect of Treasury debt— (a) in order to satisfy an obligation owed by the Treasury to D, or (b) where the effect of the transfer will be to enable the satisfaction of an obligation of any person to D in respect of Treasury debt. (5) For the purposes of this regulation, references to a designated person, in so far as they relate to a designated person within the meaning of regulation 6, are to be read as including a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person. (6) In this regulation— “corresponding non-UK country” means a non-UK country whose laws contain relevant— (a) prohibitions and exceptions corresponding to regulations 8 to 10 and regulation 25 (finance: exceptions from prohibitions); and (b) grounds for licences to be issued that correspond to the purposes in Schedule 2 (Treasury licences: purposes); “designated person” has the same meaning as it has in Part 3 (Finance); “frozen account” has the meaning given in regulation 25(7); “non-UK country” means a country that is not the United Kingdom; “non-UK relevant institution” means— (a) a person, other than an individual, which would satisfy the threshold conditions for permission under Part 4A of the Financial Services and Markets Act 2000 if it had its registered office (or if it does not have one, its head office) in the United Kingdom, or (b) an undertaking which by way of business— (i) operates a currency exchange office, (ii) transmits money (or any representation of monetary value) by any means, or (iii) cashes cheques that are made payable to customers; “recognised CSD” has the meaning given in section 285(1)(e) of the Financial Services and Markets Act 2000; “relevant money market instrument” means an instrument of a kind normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers, excluding instruments of payment; “relevant transferable security” means a security, negotiable on the capital market, of any of the following kinds, but excluding instruments of payment— (a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares; (b) bonds or other forms of securitised debt, including depositary receipts in respect of such securities; (c) any other securities giving the right to purchase or sell any security of a kind mentioned in paragraph (a) or (b); “specified account” means— (a) a frozen account of a person; (b) an account held by or for the benefit of a person with a recognised CSD; (c) an account held by or for the benefit of a person with a non-UK relevant institution in a corresponding non-UK country; or (d) an account held by or for the benefit of a person with a third country CSD in a corresponding non-UK country— where the person referred to in (a) to (d) above is also D in paragraph (2) or (3); “third country CSD” has the meaning given in section 285(1)(g) of the Financial Services and Markets Act 2000; “Treasury debt” means any relevant transferable security, relevant money market instrument, loan or credit entered into or issued by, or on behalf of the Treasury in respect of funds borrowed by or on behalf of the Treasury.”
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