In the “Corruption Crackdown: Amending the Economic Crime Bill” article we published on the 21st March 2022, we explained how changes were on their way for the Office for Financial Sanctions Implementation (OFSI). With the new Economic Crime (Transparency and Enforcement) Act 2022 these changes came to fruition, in particular with regards to the powers of OFSI as a sanction’s enforcer.
As of the 15th June 2022, the Act removed the “appropriateness” test (OFSI being satisfied on the balance of probabilities) that a person has breached a sanctions order or had reasonable cause to suspect that their activity breached the order, before issuing a fine.
Whilst OFSI will still bear the burden of proof to establish whether there was a breach of financial sanctions prohibitions or not, it can now impose a civil monetary penalty regardless of whether or not the offending party knew it had breached or if it was reasonable for them to suspect that they had breached.
In addition, under the new reform, OFSI is able to publicly name companies that have breached sanctions, even if they have not received a fine.
Trigger happy?
The ability to impose monetary penalties on a strict civil liability basis, does not look like it will be left idle by OFSI officials. Just recently, on the 29th June 2022, OFSI fined a company, Tracerco Limited, £15,000 for making funds available to a designated person under the Syria regime, thus breaching the sanctions regime. The company however did make a voluntary disclosure and was awarded a reduction of 50% on the total amount of the fine.
In short, Tracerco Limited booked 2 flights, for one of their employees, with the Syrian Arab Airlines. OFSI fined Tracerco because the airline is a public company controlled by the Syrian government, which was included in the sanctions regime.
In the world of sanctions breaches, a £15,000 fine could be classed as a drop in the ocean when compared to the $billion settlements and fines agreed with the likes of the US authorities and booking two flights is certainly not the worst example of a breach ever seen. However, the fine demonstrates the potential consequences of a breach measured against the nature of the activity that led to the breach, no matter how trivial that activity may be, or how trivial it may be perceived to be.
But what this fine really does, is display the decisiveness and commitment from OFSI in how they intend to take a hard line against those who would breach a sanctions order, irrespective of the nature and value of the breach. This sets a clear tone with regards to how OFSI views those who provide finances to sanctioned entities.
OFSI seem to appreciate the additions that have been made to their enforcement toolkit and do not seem afraid to put them to use.
Anti-Financial Crime Support – How can Complyport Help?
Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:
- Financial crime health checks and audits,
- Implementation of financial crime, AML, CTF, ABC, Fraud and market abuse controls and frameworks,
- Ongoing advice on financial crime, AML, CTF, market abuse and fraud prevention,
- Authoring/reviewing financial crime policies,
- Outsourced MLRO support
- Outsourced KYC and CDD support,
- Assistance in identifying Politically Exposed Persons (PEPs),
- Assistance in navigating international sanctions,
- Support with preventing market abuse and insider dealing,
- Expert Witness in Financial Crime cases
- Forensics and Investigations
- Design and/or delivery of online or face to face financial crime training
If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
About Complyport
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.
We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.
Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Our clients tell us we live our values; we are driven, agile and collaborative.
