Why Economic Blacklists Fail and Undermine the Rule of Law
Sanctions have become the UK’s primary instrument of foreign policy. Since the Sanctions and Anti-Money Laundering Act of 2018, ministers have been able to impose asset freezes and travel bans rapidly and at scale, and the consolidated list now runs to thousands of entries, many of them Russia-related.
Sanctions are attractive because they are immediate, visible, and project the promise of economic pressure without the risks of military intervention. Yet their track record is weak, and their legal implications corrosive. Empirical studies consistently show that sanctions rarely deliver on their ambitious objectives, particularly against large or politically resilient states. While they do impose costs, those costs alone seldom compel complex governments to change course.
British and international firms must invest heavily in compliance staff, screening systems, audits, and legal advice, while living with the constant risk that a counterparty may be listed overnight. The rational response has been de-risking: withdrawing from entire client categories or geographies, even where activity would be lawful under a licence. Charities delivering humanitarian aid struggle to transfer funds; professional service providers decline engagements that are technically permissible; and non-sanctioned individuals merely adjacent to a regime often lose access to banking on the basis of perceived exposure flagged in databases.
Legal Deficiencies
Sanctions invert the ordinary allocation of proof. An individual or an entity may be designated on the basis of reasonable suspicion that the statutory criteria are met, and the person is then excluded from the financial system. To challenge, they must seek administrative review or bring judicial proceedings, often without access to the underlying material.
Open-source reporting, including media coverage and online profiles, may form the core of the dossier, while intelligence is summarised or withheld, and without proper disclosure, it is impossible to test reliability, context, or proportionality. In Bank Mellat v. HM Treasury, the Supreme Court quashed measures that were overbroad and inadequately justified, demonstrating that judicial scrutiny can correct error, but also how long, costly, and exceptional that route is.
Opacity surrounding delisting compounds the challenge for those affected. While official reports provide headline figures on the overall size of sanctions lists, licensing activity, and enforcement actions, they fail to disclose the information most relevant to fairness and accountability.
There are no published statistics on how many delisting requests are submitted, how often they succeed, how long they take to process, or the grounds on which decisions are made. The result is a system where individuals and businesses face exclusion without any meaningful sense of how or when relief might be obtained. Even when a name is eventually removed, the damage is not undone: the person remains marked by association, their banking relationships disrupted, their commercial reputation impaired, and their access to ordinary financial services compromised. In practice, the consequences of a listing frequently outlive the formal designation itself.
Human Consequences
The human consequences are direct and severe. A listing instantly alters a life: bank and brokerage accounts are frozen, property cannot be dealt with, insurers refuse to pay, and professional relationships fall away. Licences, where granted, tend to be narrow in scope, slow to obtain, and administratively onerous. Even ordinary household expenses, such as paying rent, utilities, or school fees often require prior approval, and delays are frequent. The process can feel less like a safeguard and more like a second layer of restriction, imposing uncertainty and bureaucracy on families already struggling with the immediate impact of designation.
Beyond the immediate financial disruption, the stigma of designation carries lasting social and professional consequences. Individuals find themselves excluded from ordinary economic life, unable to open accounts, or access credit. Businesses associated with a listed person face reputational damage and may lose contracts or partnerships, even if no wrongdoing is proved. In practice, designation often functions as a form of civil exile, isolating individuals, and entities from the very systems they need to survive and rebuild.
Arbitrary Punishment and Britain’s Strategic Position
The House of Lords has warned that, without effective safeguards, sanctions risk becoming instruments of arbitrary punishment. These deficiencies also threaten Britain’s longer-term strategic position. The absence of proportionality mechanisms means families and professionals are often punished in ways unrelated to national security objectives.
Frequent and expansive use of sanctions signals that access to Western finance and infrastructure may be withdrawn for policy reasons that change with the political weather. Over time the aggregate effect is to reduce the UK’s leverage and to erode the very primacy that sanctions were meant to exploit.
These deficiencies threaten Britain’s longer-term position. The strength of the City of London rests on trust, predictability, and confidence that important decisions are taken through fair processes. In the long run, it will have the inevitable effect which will diminish the UK’s leverage and undermine the international standing of its financial system, the very foundation on which sanctions rely.
Legitimacy and Effectiveness
The present sanctions architecture is fast and far-reaching, but speed and scope cannot substitute for effectiveness or legitimacy. Economic evidence shows that targets adapt, trade patterns shift, and leverage erodes. Legal evidence shows an inversion of due process, reliance on untested material, and remedies that are opaque, delayed, and prohibitively expensive. Courts can correct some errors, but litigation remains a narrow and an unreliable backstop.
A state that aspires to lead through the strength of its law must meet the standards it proclaims, and sanctions should therefore be applied with clearer objectives, stronger evidence, and transparent avenues of redress.
If you are affected by sanctions or seeking clear, strategic legal advice in this area, do not hesitate to contact Linkilaw for a confidential consultation, and one of our specialists would be please to assist you.
