OFSI imposes £15,000 penalty upon oil and gas services company for Syria-related sanctions violations

The UK Office of Financial Sanctions Implementation recently announced the imposition of a £15,000 monetary penalty against Tracerco Limited, a UK registered oil and gas services company and United Arab Emirates based subsidiary of Johnson Matthey. The penalty, which was imposed on May 19, 2022 in accordance with s146 of the Policing and Crime Act 2017 (“PCA”), was for alleged  violations of regulation 5 of the Syria (European Union Financial Sanctions) Regulations 2012 (“the UK Regulations”) in connection with to 2 payments made for an employee's flights on Syrian Arab Airlines (“SAA”) between May 2017 and August 2018.  OFSI reports that the flights, which were part of an employee’s remuneration package that enabled the employee to take flights home, were booked through a UAE travel agency.  Tracerco allegedly violated UK Regulations when it reimbursed the travel agency for the flights made on SAA, an entity which was designated on July 24, 2012 as a public company controlled by the Syrian regime and provided financial support to the regime.  According to OFSI, the transactions at issue had a total value of nearly £3,000.

According to OFSI, Tracerco actually voluntary disclosed that it made a total of 4 payments for SAA flights while fully cooperating with OFSI investigators. OFSI determined that 2 of the 4 payments occurred prior to the introduction of PCA and were, therefore, not considered to be breaches but were considered to be an aggravating factors that showed a pattern of breaches committed by Tracerco.  OFSI ultimately imposed a penalty amount that was reduced by 50 percent because the breaches were voluntarily disclosed, were of an indirect nature, were not deliberate, and involved a low value.

OFSI also offered a compliance note based on this matter urging companies and individuals to ensure that their financial sanctions due diligence policies and procedures, which usually apply to transactions with customers and suppliers, also apply to payments made as part of employee remuneration packages which can also lead to breaches of financial sanctions regulations.  In addition, OFSI urges companies that work with third parties, such as travel agencies, to perform their own financial sanctions checks and not rely on a third party to perform the checks on their behalf, especially when the third party is not a UK company and, therefore, not required to comply with UK financial sanctions.  

UK Govt Corporate Report - Imposition of Monetary Penalty | OFSI - Report on the Imposition of Monetary Penalty

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