UK OFSI rejects discount and imposes £50k fine for Russia Sanctions breach [SEPTEMBER 1, 2021]

Intro

• On August 5 2021, the Office of Financial Sanctions Implementation ("OFSI ") imposed a GBP 50,000 penalty on TransferGo Limited ("TransferGo ").
• OFSI sanctioned TransferGo, a UK FinTech company, for breaching UK sanctions after issuing instructions to make payments to accounts held at the Russian National Commercial Bank ("RNCB "), a designated party.

Key dates

1. Between March 20 2018, and December 18 2019, TransferGo issued instructions to make 16 payments into accounts held at RNCB, the total value of which was GBP 7,764.77.

OFSI

2. OFSI considered that these payments constituted a breach of UK sanctions and that TransferGo knew or had reasonable cause to suspect that the payments were in violation of the UK sanctions.
3. OFSI's view was that TransferGo erred in assessing whether payments to RNCB were subject to financial sanctions restrictions.

The arguments

4. TransferGo contested
   • That as the account holders were not designated persons,
   • The payments into their accounts were not breaches of UK financial sanctions.
5. OFSI considered that
   • Funds held by customers of RNCB in an RNCB bank account should ultimately be viewed as belonging to RNCB.

No 50% discount - TransferGo did not voluntarily disclose

6. TransferGo did not voluntarily disclose the transactions and
   • Only disclosed some transactions in response to OFSI's information requests. 
7. Therefore, TransferGo did not receive the 50% discount on the baseline penalty amount available for voluntary disclosure.
8. To gain the benefit of voluntary disclosure in OFSI's case assessment and any subsequent penalty, which can result in a 50% reduction of the baseline penalty amount, disclosure should be:
   • "As soon as reasonably practicable" and "include all the evidence relating to all the facts of the breach ".
9. As shown by TransferGo's penalty, this disclosure must be proactive.
10. OFSI will not consider a disclosure voluntary
    • If it is in response to information requests,
    • In response to prompts during a case assessment or
    • Disclosure prompted or required by law in separate law enforcement or regulatory investigation.

Conclusion

11. This penalty decision underlines OFSI's position that
    • Transfers to an account of a designated bank,
    • Even when the accounts are not held by designated persons, are regarded as making funds available indirectly for the benefit of a sanctioned person and
    • Therefore are a breach of UK financial sanctions restrictions.

https://www.globalcompliancenews.com/2021/09/01/united-kingdom-ofsi-imposes-monetary-penalty-for-russia-sanctions-breach-16082021/