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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
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Sanctions Alert - Frozen Assets Reporting Obligations

Author: Zulfi Meerza  9 November 2022
2 min read

Introduction

The UK’s Office of Financial Sanctions Implementation (“OFSI”) issued a Financial Sanctions Notice (“the Notice”) on 2 September 2022 in relation to frozen assets reporting.


The Notice requests that all persons that hold or control funds or economic resources belonging to, owned, held, or controlled by a Designated Person (“DP”)
, provide a report detailing the relevant assets by Friday 11 November 2022.


Legal basis

Every year OFSI carries out a frozen assets reporting exercise that requires everyone in or resident in the UK (including any legal entity incorporated or constituted under UK laws) who holds or controls a DP’s assets to provide a report with details of these assets. This obligation may also be extended to those DPs who are deemed to be UK persons.


OFSI uses these reports to carry out an annual review to update its records to reflect any changes to these assets during the reporting period.


The legal basis for the reporting obligation appears to be through regulation 72 of The Russia (Sanctions) (EU Exit) Regulations 2019 (“the Russia Regulations”), which states that the UK government can request such information as it may reasonably require for the purposes of (amongst others):

 

  • Establishing the nature and amount or quantity of funds or economic resources:
    - owned, held or controlled by or on behalf of a designated person.
    - made available directly or indirectly to, or for the benefit of, a designated person.
  • Establishing the nature of any financial transactions entered into by a designated person.


It is important to note that the above specific reporting obligation under the Notice is distinct from the general reporting obligation under Regulation 70 of the Russia Regulations, which applies to ‘relevant firms’ (and ‘relevant institutions’) in the UK or under UK jurisdiction including individuals working for them. DPs are not normally subject to this general reporting obligation.


What needs to be reported?

The report to OFSI must include details of all funds or economic resources frozen in the UK, as well as those overseas where these funds or economic resources are subject to UK financial sanctions legislation i.e. overseas assets that are held or controlled by UK persons. The report must include the value of all such assets as at the close of business on Friday 30 September 2022.


Those who have previously reported frozen assets (including since February 2022) are also required to complete the report and submit it to OFSI. 


How to comply with the Notice

To make the process as efficient as possible, those caught by the Notice should (i) identity and record all frozen assets held or controlled on behalf of a DP, (ii) ensure records contain all necessary identifying information in relation to the assets including their value, and (iii) nominate an appropriate individual to send any required documents / information to OFSI.


As specified in the Notice, all returns need to be made in the form of a completed template to
ofsi@hmtreasury.gov.uk. The template can be downloaded here.


What happens in the event of non-compliance with the Notice

Failure to comply with the Notice, including failing (without reasonable excuse) to provide the information within the specified time, providing false information, destroying documents or otherwise intentionally obstructing OFSI when exercising these powers, is a criminal offence and may result in a criminal prosecution or a monetary penalty. 

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Zulfi Meerza

Senior Associate Solicitor

zulfi.meerza@rahmanravelli.co.uk
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Zulfi’s in-depth expertise in business crime investigations and serious regulatory matters makes him a logical choice to advise and represent corporates, board members, senior business figures and high net worth individuals throughout the life of a case.

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