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, imposed on May 19, 2022 pursuant to 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 two 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, were booked through a UAE travel agency. Tracerco allegedly violated the UK Regulations by reimbursing the travel agency for the SAA flights, the airline having been designated on July 24, 2012 as a public company controlled by, and providing financial support for, the Syrian regime. According to OFSI, the transactions at issue had a total value of nearly £3,000.
According to OFSI, Tracerco cooperated fully with OFSI investigators, and voluntary disclosed that it had made a total of four payments for SAA flights. OFSI determined that two of the four payments had been made prior to the introduction of PCA and were, therefore, not considered to be breaches; however, they were deemed to be an aggravating factor demonstrating a pattern of breaches committed by Tracerco. OFSI ultimately imposed a reduced penalty amount in light of Tracero’s voluntary disclosure, the indirect nature and low value of the breaches, and the fact that they were not committed deliberately.
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, since the latter may lead to breaches of financial sanctions regulations. The compliance note also urges companies that work with third parties such as travel agencies, to perform their own financial sanctions checks and not rely on third parties 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