Syed Rahman and Ulrich Schmidt summarise the notable points from the Office of Trade Sanctions Implementation’s first annual report.
The Office of Trade Sanctions Implementation (OTSI) has disclosed information about the investigations it has undertaken in its first year.
In its annual report, OTSI says that it received 146 reports of potential breaches of trade sanctions in its first 12 months in operation. It states that it is pursuing numerous investigations that may lead to fines being imposed and has referred some cases to HM Revenue and Customs for possible enforcement action.
OTSI acknowledges that it has not, so far, imposed any civil monetary penalties since beginning work as the trade sanctions enforcement body in October 2024. But it emphasises that it is continuing to expand its activity levels. It plans to extend its reach to new business sectors and increase its licensing responsibilities. Next year, it is scheduled to take responsibility for all export sanctions licensing, apart from those activities involving goods or technology that are subject to strategic export controls.
Majority
Of the 146 reports of potential breaches OTSI received in its first year, the majority came from financial services firms, which have a regulatory obligation to make such reports. But 16% came from sectors that have no duty to report. Most were made through the Gov.UK online portal for reporting a suspected breach of trade sanctions.
The report states: "The effectiveness of UK sanctions - and the extent to which sanctions support our foreign policy objectives - is underpinned by robust enforcement, which can help businesses to understand how to meet their sanctions obligations and deter those determined to evade and subvert our sanctions.’’
The report also refers to the Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2025, which gives employees protection when they make sanctions-related disclosures in the financial or transport sectors to the Department for Business and Trade.
OTSI’s role is not simply to assess potential breaches of trade sanctions and impose adequate penalties when they are necessary. It also engages with businesses within the UK to raise awareness of trade sanctions and ensure that they understand what is required for them to stay compliant, so as to not suffer any penalties. With this in mind, it can be said that OTSI has done reasonably well since it began its work in late 2024.
Challenges
It should be emphasised that OTSI faces many challenges when it comes to acting as an enforcer.
At present, it only has civil enforcement jurisdiction over trade sanctions related to:
* provision or procurement of sanctioned services
* the movement, making available, or acquisition of sanctioned goods and technology outside the UK
* ancillary services associated with the movement, making available, or acquisition of sanctioned goods and technology outside the UK
Whilst the above are certainly not hugely limited powers, they are nevertheless limited. Furthermore, should the OTSI determine that a breach of sanctions could warrant criminal enforcement, it has to refer such cases to HMRC.
OTSI’s active investigations of a number of breaches could soon lead to significant enforcement action being taken. And it is notable that OTSI has stated that it wishes to have a more pro-active approach in this regard.
