UK Ponders Stricter Stance Towards Sanctions

The UK is considering stricter enforcement of the economic sanctions measures next week after passing a relevant legislation in the wake of Russia’s invasion of Ukraine.

Starting June 15, the UK’s Office of Financial Sanctions Implementation will not have to seek evidence that companies or individuals who violate the country’s sanctions measures knew or should have known they were violating the standards.

Instead, sanctions violators will be subject to evaluation by the OFSI on stricter liability foundation, that is to say the agency will only have to prove a sanctions violation occurred, not what a company or individual knew about the violation. The latest legislative amendment, which was made by the UK government in an economic crime bill passed in March, brings the UK closer to the model used to enforce sanctions in the United States.

The UK agency would make the decision to publicize such cases on a case-by-case basis, and would do so by providing a summary of the case and the offender that committed the violation. The ability to provide such summaries would help raise awareness of the UK’s sanctions program and deter future violations. The new strict liability standard and the ability to publicize cases that don’t involve a financial penalty are relatively modest changes to the OFSI’s enforcement powers.

The main goal of the changes appears to be taking away any incentive a company may have had to avoid vetting transactions in an effort to shield itself from civil penalties. The aim is to encourage companies of all types to institute some form of sanctions due diligence.

The shift applies to the civil enforcement of all sanctions implemented by the UK, including those placed on Russia following its invasion of Ukraine. No equivalent change has been made to the threshold needed for authorities to bring a criminal case related to sanctions violations, according to the OFSI’s director.

This change will strengthen OFSI’s ability to take appropriate enforcement action against persons…that fail to ensure they are not dealing with sanctioned entities. The economic crime bill also allows the OFSI to begin publicizing the details of sanctions breaches even in instances where the agency decides not to impose a monetary penalty.