The OFSI considers many aggravating and mitigating factors when assessing the seriousness of a case, including (among others):
- whether funds or economic resources were provided directly to a designated person or entity;
- whether sanctions were intentionally circumvented;
- the value of the breach;
- knowledge of sanctions and compliance systems (but note that ignorance is no defense);
- the behavior at issue, for instance, whether the breach was deliberate or negligent, there was a failure of systems and controls, an incorrect legal interpretation was made, the person responsible appears unaware of their responsibilities, or the breach was a mistake;
- the same person has repeatedly or persistently breached sanctions, or committed an extended breach;
- materially complete and voluntary disclosure;
- the adherence to regulatory and professional standards by regulated professionals; and
- the public interest.
When OFSI concludes that the threshold for imposing a civil penalty has been met, it will determine a baseline penalty level, which may be reduced where the violation has been voluntarily disclosed. OFSI begins by calculating the statutory maximum penalty (the greater of £1 million or 50% of the value of the breach) and then decides what penalty (between zero and the maximum) would be “reasonable and proportionate, based on [its] view of the seriousness of the case.”1 This baseline penalty amount can be reduced by up to 50% when a breach of financial sanctions categorized as “serious” has been completely and voluntarily disclosed. For cases categorized as “most serious” the maximum penalty reduction is 30%.
Once this penalty recommendation has been reached, the person or entity on whom the penalty is to be imposed has a right to make representations, which may impact OFSI’s final penalty decision. OFSI also reserves the right not to impose a penalty, such as when doing so would not be in the public interest.
1 HM Treasury Office of Financial Sanctions Implementation, Monetary Penalties for Breaches of Financial Sanctions Guidance, at 16 (2021).