OFSI is not FINING a UK bank over having a customer officially designated under UK sanctions for terror financing risks.

The UK’s Office of Financial Sanctions Implementation (OFSI) recently published a disclosure notice regarding Vanquis Bank Limited (VBL), highlighting a breach of financial sanctions regulations related to terror financing risks.

The breach involved a delay in restricting access to a designated individual’s account following a pre-notification from OFSI.

Key Details:

• Pre-notification:
• OFSI notified Vanquis Bank the day before a suspected customer was officially designated under UK sanctions for terror financing risks.
• However, OFSI did not provide personal details, only that a designation was imminent and the individual might be a customer of the bank.
• Breach:
• Despite the warning, Vanquis Bank failed to restrict access to the designated person’s account for eight days after the designation.
• During this time, the individual was able to withdraw cash and make a transaction using their credit card.
• Sanctions Screening Failure:
• The bank uses two suppliers, one for the sanctions list and another for automated screening.
• A technical issue led to alerts being falsely closed as duplicates, delaying manual review and escalation.
• OFSI’s Response:
• Although the breach was considered moderately severe, OFSI chose not to impose a monetary penalty.
• Instead, it published the disclosure to highlight the importance of timely sanctions compliance.
• Mitigating Factors:
• OFSI acknowledged that Vanquis Bank cooperated fully, voluntarily disclosed the breach, and there was no evidence of deliberate circumvention.
• The cash withdrawal occurred within 24 hours of the designation.

Here’s a concise report summarising the UK sanctions enforcement agency’s disclosure regarding Vanquis Bank:

Timeline of Events

• Day 1: OFSI notified Vanquis Bank that a customer might be imminently designated under UK sanctions for terror financing risks. No personal details were provided.
• Day 2: The individual was officially designated.
• Days 2–8: Vanquis Bank failed to restrict access to the account. During this period:
• The individual withdrew cash.
• A credit card transaction was processed.

Cause of Breach

• Vanquis Bank uses two third-party suppliers:
• One for maintaining the sanctions list.
• Another for automated screening.
• A technical issue caused alerts to be incorrectly closed as duplicates, delaying manual review and escalation.

OFSI Assessment

• Severity: Moderately severe breach.
• Penalty: No monetary penalty imposed.
• Disclosure Purpose: To raise awareness and reinforce the importance of timely sanctions compliance.

Mitigating Factors

• Vanquis Bank voluntarily disclosed the breach.
• Full cooperation with OFSI.
• No evidence of deliberate circumvention.
• The cash withdrawal occurred within 24 hours of designation.

Key Takeaways

• Sanctions screening systems must be robust and responsive.
• Pre-notification from OFSI should trigger immediate internal action.
• Technical failures in screening systems can lead to compliance breaches.
• OFSI may opt for public disclosure over financial penalties to promote best practices.

This case underscores the importance of robust and responsive sanctions screening systems, especially when pre-notification is provided.  

References

Publication of a Report Vanquis Bank Limited , GOV.UK https://assets.publishing.service.gov.uk/media/68beb534de0987fe84e0dd0f/VBL_Disclosure_Notice_08SEPT2025.pdf

OFSI declines to fine UK bank over sanctions breach https://globalinvestigationsreview.com/just,sanctions/article/ofsi,declines,fine,uk,bank,over,sanctions,breach