On 9 October, the Office of Financial Sanctions Implementation (OFSI) released its annual review for the financial year ending 2020, during which it issued the largest monetary penalty for breach of financial sanctions in the UK’s history. On 18 February 2020, OFSI imposed final penalties of £7.69 million and £12.78 million on a multinational bank for making loans to a Russian state bank bound by restrictive measures, in breach of EU regulations.
The bank’s cooperation resulted in a 30% reduction amounting to over £11 million – demonstrating the significance OFSI is seeking to place on voluntary disclosure by companies. Alongside enforcement actions therefore, OFSI has said it will endeavour to improve compliance by keeping businesses up to date with the latest developments in financial sanctions regimes and encouraging them to learn from past breaches.
As well as including the largest monetary penalty, the OFSI annual review evidences increasing reports of financial sanctions breaches in the UK. 140 potential breaches of financial sanctions were reported this financial year, a significant increase from the 99 reports made last year. Meanwhile the value of breaches reported increased to £982.34 million from £262.33 million.
Businesses should be aware of a heightened enforcement environment in this jurisdiction, reflecting the global growth in financial sanctions legislation. As it begins to map out its independent sanctions policy following the end of the Brexit transition period, OFSI is slowly beginning to assert itself as a regulator willing to open investigations and to issue significant fines.
OFSI continues to work to improve financial sanctions compliance across all sectors in the UK. As well as taking proportionate enforcement action in response to breaches, OFSI will continue to use the ‘lessons learnt’ from such breaches to carry out targeted outreach and engagement across various sectors, so that businesses, charities and individuals can develop and improve their compliance.”