Penalties for breaching financial sanctions have increased this week (since 2 May 2017) as HM Treasury brings The European Union Financial Sanctions (Enhanced Penalties) Regulation 2017 (the Regulation) into force.
HM Treasury has, through the Regulation, introduced stronger penalties for those who breach financial sanctions.
Such changes are set to bring the EU financial sanctions regime into line with breaches of UK and EU terrorist asset freezing regimes.
What offences have increased penalties?
The following offences have increased penalties:
- Offences for contravening or circumventing financial prohibitions;
- Breaches of licence terms;
- Obtaining a licence under false pretences;
- Reporting obligations; and
- Failing to comply with information requests.
What are the new penalties?
The penalty has increased from two years to seven years for more serious (indictable) breaches of sanctions.
The penalty has increased from three months to a "relevant maximum" for less serious (summary) breaches of sanctions. This "relevant maximum" is currently six months in England and Wales, twelve months in Scotland and six months in Northern Ireland.
The "relevant maximum" increases to twelve months in England and Wales once section 154(1) of the Criminal Justice Act 2003 comes into force. Whilst this section has existed, unenacted, since the last labour government, the Justice Select Committee have recently created a report which advocating its enactment.
Last month, the Office of Financial Sanctions Implementation (a Treasury department) was granted, under the Policing and Crime Act 2017, a range of powers giving them enforcement powers and the ability to impose new monetary penalties. In addition, the same legislation increased the imprisonment terms for financial sanctions, and applied both Deferred Prosecution Agreements and Serious Crime Prevention Orders to some financial sanctions offences.
These increases to financial sanction penalties highlight a continuation of Treasury policy to create a tougher and broader financial sanctions regime. However, only time will tell whether such powers will be used effectively in practice.