Sanctions tracker: OFSI issues new FAQs on UK sanctions and updated enforcement guidance

The UK’s Office of Financial Sanctions Implementation (“OFSI“) has recently introduced further sanctions guidance in the form of (i) new FAQs “aimed at providing technical support to industry partners and the public”; and (ii) updated guidance on enforcement and monetary penalties (the “Enforcement Guidance“).

New FAQs

OFSI has confirmed that the FAQs are designed to complement existing guidance, which will continue to take precedence along with the relevant legislation. FAQs will be published on an “as- needed” basis, focusing on areas where new guidance would be beneficial to a substantial audience. These may include significant policy changes, new general licences (“GLs“), enforcement actions or wider implementation problems.

OFSI will not generally accept individual requests for new FAQs.

FAQs may be withdrawn at OFSI’s discretion. There is a separate webpage available where those withdrawn FAQs will be listed.

The current list of FAQs covers the following areas:

• General queries on the OFSI e-alert service and jurisdictional scope of UK sanctions;
• Russia sanctions, largely reproducing the FAQ section in OFSI’s pre-existing guidance on Russia financial sanctions (which has now been transitioned to a webpage rather than the previous pdf version), and the pre-existing oil price cap guidance;
• Libya sanctions – comprising an FAQ on the status of subsidiaries of the Libyan Investment Authority and Libya Africa Investment Portfolio;
• General licensing, currently comprising FAQs on the legal services GL; and
• The application of UK sanctions to Crown Dependencies and Overseas Territories.

The introduction of a new route under which practical guidance can be provided to companies seeking to comply with UK sanctions will no doubt be a welcome development. Although the current FAQs largely replicate pre-existing content, it is hoped that OFSI will continue to supplement this initial list to assist in resolving some of the common practical issues that continue to arise from the application of the relevant restrictions.

Enforcement and monetary penalties guidance

The updates to the Enforcement Guidance communicate a change in OFSI’s policy, in that OFSI will now always apply the most recent iteration of the Enforcement Guidance when assessing cases. The press release announcing this development notes that “this makes engaging the with the enforcement process easier and clearer for all parties, especially instances where breaches span across the current guidance and previous iterations of the guidance”. The Enforcement Guidance clarifies that this does not impact OFSI’s application of relevant legislation when considering potential breaches (i.e. it will continue to assess cases in line with the applicable law at the relevant time).

Section 3.4 of the Enforcement Guidance has also been updated to provide further detail on the case factors taken into account by OFSI when assessing a case, confirming that OFSI will make an overall assessment of (i) the breach severity (by reference to the value of the breach, the harm or risk of harm arising, and whether there was deliberate circumvention of sanctions), and (ii) the conduct of the person in question, taking into account their mental state (intention, knowledge, reasonable cause to suspect), the person’s knowledge of sanctions and compliance systems, factors such as failure to apply for a licence/breach of licence terms, professional facilitation, repeated/persistent breaches, self-reporting / cooperation and, where the breach involves issues of ownership and control by a sanctioned person, the due diligence undertaken. After considering both severity and conduct, OFSI will make an overall assessment and, in all monetary penalty cases, classify the case as either “serious” or “most serious”.

The Enforcement Guidance also reiterates that OFSI will consider the public interest in pursuing enforcement action, and in determining the type of enforcement action to pursue.

The Enforcement Guidance has also been transitioned to a webpage, rather than the previous pdf version.