The Abu-Dhabi-based subsidiary of a UK-registered commodities trading company sold a volume of oil to a company named DP. DP is listed on the Consolidated List of Financial Sanctions Targets in the UK published by the UK Office for Financial Sanctions Implementation (“OFSI”), due to suspicions of supplying oil to the Syrian regime. The transaction with DP is identified during a routine audit carried out by the UK company, which has access to the customer KYC information held by the Abu Dhabi subsidiary. Revenue from that transaction has entered the parent company’s UK bank account.
- OFSI has jurisdiction whenever there is a UK nexus. This is a fact-specific analysis, and may include circumstances in which the breach is caused by the actions of a foreign subsidiary of a UK company.
- OFSI may impose a monetary penalty when it is satisfied that a person (including legal entities) (i) has breached a prohibition, or failed to comply with an obligation, under the sanctions regime; and (ii) knew, or had reasonable cause to suspect, that the person was in breach of the prohibition or failed to comply with the obligation. The monetary penalty can amount to up to £1 million or 50% of the value of the breach, whichever is larger. A timely and complete voluntary disclosure may lead to a reduction in the penalty of up to 50%.
- OFSI can also refer the case to law enforcement agencies for criminal investigation and, potentially, prosecution.
- If a UK company is profiting from the overseas conduct of its foreign subsidiary, which would be a breach of EU/UK sanctions if the UK company carried out the conduct, it could also become liable under UK anti-money laundering legislation, the Proceeds of Crime Act 2002.