New Guidance on Financial Sanctions – OFSI approach to compliance and enforcement

11 August 2017

With recent developments in the field of sanctions policy the Office of Financial Sanctions Implementation has updated its Guidance. This is in light of new Regulations in the area in force from 8 August. Sanctions policy and the UK’s approach to this have also been in the spotlight with the forthcoming International Sanctions Bill ( see related blog).

The Guidance was issued on 8 August and replaces a previous text from 2013. It sets out obligations under financial sanctions as well as OFSI’s approach to licensing and compliance issues. It takes into account relevant case law and EU guidance at the date of publication. 

One of the key chapters is that which looks at “who is subject to financial sanctions”. This includes information on how to use the consolidated list which includes all designated persons subject to financial sanctions under EU and UK legislation as well as those subject to UN sanctions through EU regulations. Guidance is offered on the issue of ownership and control and the reporting obligations to OFSI set out. This takes into account the new regime in relation to reporting regulations now applying to a “relevant business of profession” - see related blog.

In relation to monetary penalties the Guidance outlines OFSI’s processes for issuing monetary penalties for financial sanctions breaches, including: the case assessment process; penalty calculation process; and, procedural rights.  The OFSI underlines that a breach of the requirements may result in a criminal prosecution or monetary penalty. Whilst recognising that the decision to pursue a criminal prosecution for breach of financial sanctions ultimately lies with the prosecuting authorities, the Guidance sets out the issues that it will consider when considering what action to take. It will not come as a surprise to those who are familiar with prosecuting authorities (in particular in relation to corporates) that relevant considerations include whether the breach was self-disclosed fully and promptly, the level of co-operation with any inquiries; and, action being taken to improve future compliance.

The Guidance confirms it does not constitute legal advice.  It is important for those affected to consider legal advice at the earliest stages as there are serious consequences for entities that breach sanctions.

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