On 10 October 2024, the UK's Office of Trade Sanctions Implementation ("OTSI") officially commenced operations, marking a significant milestone in the UK's approach to trade sanctions enforcement. This new agency, operating under the Department for Business and Trade, will benefit from a comprehensive set of civil enforcement powers that businesses must now navigate with diligence. The launch of OTSI represents a new chapter in UK trade sanctions enforcement (see the official press release here).
OTSI is now responsible for facilitating sanctions compliance for businesses and taking enforcement action in respect of breaches of certain trade sanctions. OTSI’s new enforcement powers for trade sanctions complement those HM Revenue & Customs ("HMRC") already has. The Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024, which came into effect on 10 October, empower OTSI to impose civil sanctions for violations of specific trade, aircraft, or shipping sanctions under a strict liability framework (see our previous post for further detail).
OTSI also takes on responsibility for issuing licences for certain sanctioned activity, specifically the provision of standalone services, including professional and business services. New guidance on how to apply for trade sanctions licences, including the relevant body for each type of licence, has been published today (along with updated guidance on the Russia professional and business services restrictions, reflecting OTSI's new licensing role.
As OTSI begins its enforcement activities, businesses are advised to review and enhance their trade sanctions compliance programs. The strict liability approach underscores the importance of robust due diligence processes, especially for companies with international supply chains or export operations. Companies within the scope of the new mandatory breach reporting obligations (largely the financial and legal sectors – see our previous post for further detail) should ensure they have appropriate internal arrangements in place to make any required reports, and familiarise themselves with OTSI's guidance on this topic.
More generally, companies should closely monitor OTSI's guidance and enforcement actions in the coming months to ensure they remain compliant in this evolving regulatory landscape. The agency's approach to exercising its powers will likely evolve, and companies must stay informed to ensure ongoing compliance with trade sanctions regulations.
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