Regulations introduced on 8th August impose obligations on those working in a wide range of sectors to report information to the Office of Financial Sanctions Implementation (OFSI) which would facilitate compliance with financial sanctions. This is to assist OFSI in monitoring compliance with financial sanctions and for assessing any suspected breaches. It also has power to impose a monetary penalty on individuals and organisations who breach financial sanctions and can report serious breaches to law enforcement bodies for investigation and prosecution.
Previously, although there was still an obligation on a wide range of sectors to report, enforcement action could only be taken against individuals or organisations in the regulated financial services sector who failed to report certain information.
From 8th August, those working in the following sectors will be required to report:
- a dealer in precious metals or stones;
- an estate agent;
- an external accountant;
- an independent legal professional;
- a tax adviser;
- a trust or company service provider.
To assist individuals and businesses who may be affected by the changes to comply with their obligations, OFSI has updated its guidance on financial sanctions. The guidance can be accessed here.
The type of information it is envisaged in the guidance which should be reported is: that a person is a designated person; that a breach of financial sanctions legislation is suspected or has taken place; details of any funds or economic resources that have been frozen and any credits to a frozen account.
Those who fail to comply with the reporting obligation will commit a criminal offence and could be subject to criminal prosecution or a monetary penalty. Breaches are considered to be a serious criminal offence, and this was reinforced by the introduction of the Policing and Crime Act 2017 earlier this year, in which the penalties for breaches of financial sanctions legislation were extended. Individuals can now face up to 7 years’ imprisonment for financial sanctions breaches and organisations can be given an unlimited criminal fine. OFSI can also impose civil penalties of up to £1 million or one half of the value of the breach, whichever is greater.
The introduction of the civil penalty signalled a shift in the UK government’s focus to tougher enforcement of sanctions breaches, and this new reporting power seems to continue that trend.