OFSI has issued its first FINE for breaches of sanctions imposed in response to Russia’s full-scale invasion of Ukraine.

Big news from HM Treasury’s sanctions enforcement unit as the Office of Financial Sanctions Implementation (OFSI) has dished out its first financial penalty for breaches of sanctions imposed in response to Russia’s full-scale invasion of Ukraine.

• OFSI issued the £15,000 penalty against INTEGRAL CONCIERGE SERVICES LIMITED for 26 payments made or received by the London-based company in connection with property management services provided to an unnamed individual sanctioned by the Foreign, Commonwealth and Development Office in early 2022.

https://assets.publishing.service.gov.uk/media/66f3e3823b919067bb482697/Report_of_Penalty_for_Breach_of_Financial_Sanctions_-_ICSL.pdf

• While HM Treasury has not disclosed all the details of these transactions, the breach notice provides good insight into the compliance lessons to be learned and OFSI’s emerging approach to enforcing financial sanctions.

Here are 6 key features from this announcement:

1️⃣ Despite the high risks posed by its wealthy Russian and Ukrainian client base, the company appears to have been alarmingly complacent, failing to seek guidance despite admitting its knowledge of sanctions was “extremely limited.”

2️⃣ Although the payments involved fairly small amounts of money – totalling just over £15k – the repeated nature of the breaches over a long period was flagged as severe and “blunted the intended effect of applying pressure” to sanctioned individuals.

3️⃣ Only 10 of the 26 breaches were penalised because the company either knew or had reasonable cause to suspect it was breaching sanctions. In comparison, OFSI used its new Economic Crime Act powers for the first time to penalise the remaining 13 breaches on a no-fault basis.

4️⃣ Perhaps one of the most encouraging features is that the breach came to OFSI’s attention through “proactive means” after they identified the sanctioned individual had residential property in the UK and began investigating potential breaches.

5️⃣ Because the company didn’t self-report its breaches, it didn’t get a reduced fine but cooperated with the investigation and provided further information about breaches that OFSI wasn’t aware of.

6️⃣ The company also breached reporting requirements under HM Treasury’s general licences that allow payments for water and energy bills, which OFSI considered an aggravating factor of the company’s conduct rather than imposing a separate fine.

Sources

• https://www.gov.uk/government/collections/enforcement-of-financial-sanctions#integralconciergeserviceslimited
• https://assets.publishing.service.gov.uk/media/66f3e3823b919067bb482697/Report_of_Penalty_for_Breach_of_Financial_Sanctions_-_ICSL.pdf
• https://www.linkedin.com/posts/spotlightoncorruption_sanctions-enforcement-ofsi-activity-7246888299905052672-w4pv/?utm_source=share&utm_medium=member_ios
  https://www.spotlightcorruption.org/sanctions-all-bark-and-no-bite/

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