UAE-based UK-registered entity fined for sanction breaches

The Office of Financial Sanctions Implementation (OFSI) imposed a £15,000 penalty on

1. UAE-based and UK-registered entity, Tracerco Limited (Tracerco), for breaching UK sanctions
2. Tracerco purchased flights for an employee from UK-sanctioned Syrian Arab Airlines (SAA).
3. The total transaction value of the breach was approximately £3,000. In its penalty notice published on 29 June 2022, OFSI stated that Johnson Matthey, the parent company of Tracerco, submitted a breach report on behalf of Tracerco in January 2020, almost three years after the first payment was made to SAA.
4. The self-report by Johnson Matthey and cooperation with OFSI's subsequent investigation afforded Tracerco a 50% discount on the penalty it received. Johnson Matthey was also credited for improving its compliance function after the breaches had been reported.

In imposing this penalty, OFSI

1. Issued a reminder that UK financial sanctions can also apply to the actions of UK companies abroad, highlighting the need for companies with a UK nexus to ensure compliance with relevant restrictions.
2. Warned against companies relying on third parties to undertake financial sanctions checks on their behalf, noting that Tracerco made payments through a third-party travel agency but remained liable for the breach.

History

1. OFSI has engaged in enforcement action against companies every year since its first administered fine in January 2019, the Tracerco fine being its seventh enforcement action overall.
2. See the other six
   • https://www.gov.uk/government/collections/enforcement-of-financial-sanctions
3. Of these actions, however, only one has resulted in a fine of more than six figures, indicating that OFSI continues to utilise its powers most frequently on discrete financial sanctions breaches.
   • Standard Chartered Bank in 2020, where a £20.47 million total fine was imposed.

Future

1. Given the breadth of new sanctions and numerous designations implemented this year in relation to Russia's aggression towards Ukraine, many continue to speculate as to whether the agency will be presented with an opportunity to engage in another large enforcement action, akin to its action against Standard Chartered Bank in 2020, where a £20.47 million total fine was imposed.
2. In an evidence session held by the UK Treasury Committee with the Director and Deputy Director of OFSI on 22 June 2022, the OFSI directors indicated that OFSI's short term forecast includes a significant increase in OFSI-led enforcements leading to financial penalties.
3. Whether these enforcements will buck the current trend and involve more serious breaches, and in turn heftier penalties, remains to be seen.

Source

https://www.mondaq.com/uk/white-collar-crime-anti-corruption-fraud/1209328/ofsi-fines-uk-firm-located-overseas-for-uk-financial-sanctions-breach-