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U.K. Announces New Sanctions Office to Boost Compliance

Governments have been busy on the sanctions front since 2022, many aimed at Russia and Russians. The U.S. Treasury’s OFAC aggregates and maintains sanctions lists and enforces compliance in the U.S. In the U.K., the Office of Financial Sanctions Implementation (OFSI) in His Majesty’s Treasury maintains the country’s sanctions lists.

Pushed by concerns of Russian circumvention of sanctions, the U.K. government has announced creation of a new unit – the Office of Trade Sanctions Implementation (OTSI) within the Department for Business and Trade (DBT). OTSI’s purpose is to improve the implementation and enforcement of trade controls and sanctions.

OTSI will reportedly work in tandem with OFSI. Along with other responsibilities such as trade licensing, OFSI remains responsible for imposing asset freezes on designated persons and prohibiting U.K. persons from dealing with a designated person.

OTSI will be responsible for supporting companies in their compliance efforts, and for civil enforcement of sanctions. It will also investigate breaches and issue monetary penalties. OTSI can also refer violations to criminal violation of trade restrictions.

Why a New Office

A report in CITYA.M., a London business and financial news service, points to the OFSI’s enforcement as trailing compared to the U.S.’s OFAC. It notes that the U.K. levied just 20 million pounds (approximately 25 million dollars) since 2019, compared to the U.S. levying $1.54 billion in 2023 alone. (However, OFAC has not levied that much every year. In fact in 2022, fines totaled $42 million, and in 2021 just $20 million.)

According to CITYAM, “Much like OFAC, its priorities are to include clamping down on trade sanctions evasion, raising awareness of trade sanctions, detecting and responding to breaches and maintaining and building confidence in the U.K.’s trade sanctions. It will also have the power to refer cases to HM Revenue and Customs, for criminal enforcement.”

The U.K. government is just now setting the new office up, and the precise integration with existing authorities will take some time. In the meantime, compliance must follow existing rules and procedures as found in the OFSI General Guide to Financials Sanctions (and summarized in the Vendor Information Management Center of Excellence‘s AVIP Course).

But the point seems to signal that U.K. intends to bring stricter enforcement to its sanctions while helping companies comply.

For information on how VendorInfo automates sanctions screening, contact us.

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