The UK Office for Financial Sanctions Implementation recently used its new Disclosure enforcement power for the first time. The Disclosure power, which OSFI acquired last year via the Economic Crime (Transparency and Enforcement) Act 2022, enables OFSI to publish a notice that provides details of financial sanctions breaches, including the name of the person/entity who committed the breach, for moderately severe breaches that OFSI has determined are not serious enough to justify a civil monetary penalty but are too severe for an administrative warning letter. According to OFSI, the Disclosure power enables the Office to further tailor enforcement actions according to different severities of breaches it sees. The notices are intended to act as a form of censure and deterrent that will provide lessons in sanctions compliance to the companies and individuals that see them.
OFSI reports that the first published Disclosure Notice demonstrates the importance of having policies in place that appropriately manage sanctions risks and ensure that funds are not made available to designated persons or entities that they own or control. For example, one company in the notice committed a breach because its sanctions policy failed to restrict debit card use where there was a possible name match to a designated person. In another instance, a breach occurred because a company lacked resources to review sanctions alerts on weekends.
OFSI also published updated guidance on Disclosures in Chapter 10 of the updated Monetary Penalty and Enforcement Guidance where it provides an overview of the Disclosure power, how OFSI intends to use the power, and the different steps in the process. OFSI encourages anyone involved in sanctions compliance to read the guidance update and the first Disclosure Notice, both of which were released on August 31, 2023.