Author: Syedur Rahman
24 June 2022
2 min read
Syed Rahman of Rahman Ravelli details the changes announced by the Office of Financial Sanctions Implementation (OFSI)
Guidance from the Office of Financial Sanctions Implementation (OFSI) has been updated to reflect newly-introduced alterations to the UK sanctions regime
The UK’s sanctions enforcement agency revised its guidance a week prior to civil breaches of financial sanctions becoming a strict liability offence on 15 June.
Although an individual or company can now be penalised for an unknowing sanctions breach, OFSI has stated that it will not take that course of action in every case. It has said that it will consider issues such as the value involved in the breach and whether those who committed it self-reported it.
Yet although OFSI has said that it will look more kindly on breaches that are not intentional, it has said it will not rule out bringing enforcement action in such cases.
The guidance says: “It is possible for a mistake to cause a breach of financial sanctions regulations, for example making funds available to a designated person,
“Even without the knowledge that the action would be a breach or provide any reasonable cause to suspect this, the matter would still meet the legal standard for HM Treasury to impose a monetary penalty.”
The updates to OFSI’s enforcement powers came as the result of the Economic Crime Act being passed in March, as a swift response to Russia’s invasion of Ukraine. The Act removed the need to show that a corporate or individual knew or had reasonable cause to suspect that their conduct breached a sanction in order for them to be penalised by OFSI.
The Act also makes it possible for OFSI to publish the details of a sanctions breach even if a financial penalty is not imposed. According to the guidance, this would be done when OFSI believes doing so would provide “valuable compliance lessons for industry”.
In such situations, OFSI would publish the financial value of the sanctions breach, the identity of those who committed it and what the agency calls “other information required to give a true understanding of the case”.
The Economic Crime Act has also changed the procedure for challenging the imposition of a sanctions fine. Senior Treasury officials will now be able to review proposed penalties. Previously, the economic secretary to the Treasury had to personally review all challenges. OFSI believes this will enable the Treasury to manage any increase in the number of penalty challenges.
OFSI has brought six enforcement actions since it gained the power to issue them four years ago.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.