UK OFSI Guidance on penalties for FINANCIAL SANCTIONS breaches & the effect of a UK Nexus.

The Policing and Crime Act 2017 (the “2017 Act”) contains powers for HM Treasury to impose monetary penalties for breaches of financial sanctions.

The Office of Financial Sanctions Implementation (OFSI) is the part of the Treasury that applies these powers. OFSIS has therefore issued updated guidance that:-

1. That sets out what the powers are,
2. How OFSI will use them, and a
3. Person’s rights if OFSI imposes a monetary penalty on them.

The OFSI have issued this guidance in line with section 149 (1) of the 2017 Act, which states The Treasury must issue guidance as to:

1. The circumstances in which it may consider it appropriate to impose a monetary penalty under section 146 or 148
2. How it will determine the amount of the penalty

The OFSI also provides guidance where there is a UK Nexus with a breach overseas.

1. A breach does not have to occur within UK borders for OFSl’s authority to be engaged. There simply must be a connection to the UK, which the OFSI call a UK nexus.
2. Financial sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons, wherever they are in the world. Individual and legal entities who are within or undertake activities within the UK’s territory must comply with financial sanctions that are in force.
3. All UK nationals and legal entities established under UK law, including their branches must also comply with UK financial sanctions that are in force, irrespective of where their activities take place.
4. A UK nexus might be created by such things as a UK company working overseas, transactions using clearing services in the UK, actions by a local subsidiary of a UK company (depending on the governance), action taking place overseas but directed from within the UK, or financial products or insurance bought on UK markets but held or used overseas. These examples are not exhaustive or definitive and will depend on the facts in the case.
5. Some breaches of financial sanctions involve complicated structures or relationships, where a genuine UK nexus exists but is not immediately apparent. In every case, the OFSI will consider the facts to see whether the potential breach comes within our authority.
6. If the OFSI come across breaches of financial sanctions in another jurisdiction, the OFSI may use our information-sharing powers to pass details to relevant authorities if this is appropriate and possible under UK law.
7. OFSI will continue to take a fair and proportionate approach to assessments and consider each breach on a case-by-case basis, as set out below. In certain circumstances, OFSI may choose not to impose a monetary penalty where alternative and more proportionate remedial action is in the public interest.

Read the new guidance here: https://lnkd.in/dY2GeMQ5