JERSEY and GUERNSEY connected to suspected sanction breaches

In the UK, Since February 2022, property and related services firms reported just over 1% of all suspected breach reports submitted to the Office of Financial Sanctions Implementation (OFSI).

Meanwhile, 7% of all suspected breaches reported to OFSI by other types of firms involved property and related services firms in some capacity. This discrepancy indicates a lack of reporting to OFSI by firms operating in the UK property and associated services sector.

PROPERTY AND RELATED SERVICES THREAT ASSESSMENT [APRIL 2025]

In its Property and Related Services Threat Assessment [April 2025], the OFSI includes JERSEY and GUERNSEY as jurisdictions connected to suspected sanction breaches.

The OSI says that of all suspected breaches involving the UK property and related services sector reported to OFSI since 2022, 22% involved actors in intermediary jurisdictions. These included:

• Austria.
• Azerbaijan.
• the British Virgin Islands (BVI);
• the Republic of Cyprus.
• JERSEY.
• GUERNSEY.
• Luxembourg.
• Switzerland.
• Türkiye.
• the United Arab Emirates (UAE); and
• the United States of America (USA).

The figure above is based only on suspected breach reports and does not necessarily mean any breaches have occurred in those jurisdictions.

INTERMEDIARY JURISDICTION RISKS

Typically, an intermediary jurisdiction nexus involves individuals or entities based in those jurisdictions who are directly or indirectly involved in a suspected breach.

The references to intermediary jurisdictions above do not mean that those jurisdictions do not (where relevant) effectively enforce UK financial sanctions. OFSI works closely with the appropriate authorities in these intermediary jurisdictions.

Numerous factors contribute to an intermediary jurisdiction nexus. Before the Russian invasion of Ukraine in February 2022, Russian DPs typically structured their financial interests, including the ownership and control of assets, through a small number of favoured intermediary jurisdictions.

While some intermediary jurisdictions have historically offered better privacy through their legal and financial systems and different tax regimes than the UK, some do not but have still been attractive to Russian investors for commercial reasons, including the products and services that they provide and/or their links to major markets.

OFSI CASE STUDIES

OFSI encourages vigilance from UK property and related services firms when the red flags above arise in conjunction with an intermediary jurisdiction nexus.

Suspected breaches of UK financial sanctions often involve a nexus with an intermediary jurisdiction (a jurisdiction other than the UK and the jurisdiction to which UK financial sanctions relate, such as Russia) or multiple intermediary jurisdictions.

CASE STUDY 1: A UK property and related services company facilitates breaches of UK financial sanctions on behalf of a Russian DP

CASE STUDY 2: DPs' use of complex corporate structures and enablers to facilitate the sale of a UK property

Whilst none of these individual red flags automatically suggest the activity within the business carried out by the following is illicit, they should trigger increased due diligence.

• Company M and
• Company M Sub .

When considering these red flags in context,

• Agent A has reasonable cause to suspect that
• Person X, Person Y, Company M and Company M Sub ARE ACTING AS ENABLERS by
• Facilitating transactions for the benefit of or on behalf of Russian DPs, potentially breaching the Russia (Sanctions) (EU Exit) Regulations 2019.

As a relevant firm defined in legislation,

• Agent A must report suspected breaches (as the information or other matter on which the knowledge or cause for suspicion came to it while carrying on its business) to OFSI and submit an SAR via the usual reporting channels.

CASE STUDY 3: DPs' use of family members and proxies to move UK property assets

Source

• https://assets.publishing.service.gov.uk/media/67f7d42804146682e61bc80f/OFSI_Property_and_Related_Services_Threat_Assessment.pdf