U.K. to Embrace Stricter Standards Around Sanctions Enforcement

Instead, sanctions violations will be evaluated by the OFSI on a strict liability basis—meaning that the agency will only have to prove a sanctions violation occurred, not what a company or individual knew about the violation.

The change, which was made by the U.K. government in an economic crime bill passed in March, brings the U.K. regime closer to the model used to enforce sanctions in the U.S.

The shift applies to the civil enforcement of all sanctions implemented by the U.K., 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,” OFSI Director Giles Thomson said in a blog post Wednesday.

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.

Mr. Giles said the 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 U.K.’s sanctions program and deter future violations, he added.

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, according to Matthew Burn, a lawyer at the law firm Kingsley Napley LLP in London.

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, he said.

“The aim is to encourage companies of all types to institute some form of sanctions due diligence,” Mr. Burn said. “This makes clear there’s nothing to be gained by covering your eyes.”

Write to Dylan Tokar at [email protected]