Financial sanctions continue to make front page headlines around the world – whether it’s Iran, North Korea or Russia – however it’s rarely the UK’s sanctions regime which causes such headlines.
The establishment of the UK’s Office of Financial Sanctions Implementation (“OFSI”) in 2016 was intended in part to give greater prominence and focus to the UK’s implementation and enforcement of financial sanctions. We pull out below some of the key points from their April 2017 – March 2018 Annual Review, published 5 October 2018.
The review provides a snap-shot of the work of this relatively new body in raising awareness of financial sanctions and addressing suspected breaches.
Sanctions by numbers
- The UK implemented 29 financial sanctions regimes;
- 122 new targets were added to the UK’s sanctions list, the Consolidated List;
- OFSI received 122 reports of suspected breaches of financial sanctions;
- £0 of penalties were imposed in response to those reports;
- As of September 2017, £12.8 billion of frozen funds were held by UK businesses; the majority of these relating to the Libyan regime;
- Over 50 new licences were issued in 2017 – 2018; over half of which were for payment of legal fees; and
- 60+ speaking engagements were undertaken by OFSI to raise awareness of its work.
The sanctions implemented pursuant to the 29 financial sanctions regimes were imposed for a variety of reasons, including preventing terrorist financing, prevent nuclear proliferation, human rights abuses and the misappropriation of assets.
In April 2017, OFSI were given the power to impose penalties for serious financial sanctions breaches of up to £1 million or 50% of the breach; whichever is higher.
During the year, provisions were brought in which allow the UK to implement new UN sanctions regimes and listings immediately on the relevant resolution being adopted; so called ‘avoidance of delay’ provisions. OFSI has already implemented 18 avoidance of delay listing, helping to ensure that updated information is available.
Despite having received 122 reports of suspected breaches of financial sanctions, with a reported value of around £1.35 billion, not a single financial penalty was imposed in the reporting period. This failure to impose penalties puts it at odds with the US who continued to impose penalties for sanctions breaches during this period. OFSI state that “it is likely” that they will impose monetary penalties in 2018-19. We have the advantage of already being part-way through the 2018-2019 reporting period and so far, OFSI remain at the same level as 2017 – 2018. Watch this space over the next six months…
OFSI have also committed to publishing more targeted guidance in this period and this is an area where they seem to have stuck to their word as we’ve seen a steady stream of guidance from OFSI, including guidance focused on specific regimes and how to report information to OFSI.
As well as marking the end of OFSI’s next reporting period, March 2019 is perhaps better known for being the month in which the UK leaves the EU and of course, no horizon scan would be complete without consideration of Brexit plans.
OFSI used its review to outline its commitment to ensuring sanctions are used as an “effective tool to take concerted action” both now and when the UK leaves the EU; referring to the “deep partnership” the UK has proposed for cooperation following Brexit. The report goes on to state that a “key focus will be maintaining its central role in global sanctions implementation as the UK prepares to leave the EU”. As with all things Brexit, we await to see what this will mean in practice; however we anticipate that for sanctions policy this won’t result in any drastic deviations from EU policy.