10/28/2024 | News release | Distributed by Public on 10/28/2024 06:25
On 10 October 2024, the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 came into effect in the UK. The regulations provide the newly created Office for Trade Sanctions Implementation with civil powers to enforce against trade sanctions violations.
The Office for Trade Sanctions Implementation's (OTSI) mandate concerns the civil enforcement of sanctions relating to:
OTSI is an office within the UK Department for Business and Trade and has enforcement powers similar to those available to the Office of Financial Sanctions Implementation (OFSI), which is responsible for the enforcement of financial sanctions. The Export Control Joint Unit maintains its remit for export licenses, while His Majesty's Revenue and Customs (HMRC) continues to be responsible for criminal penalties in respect of trade sanctions.
Apart from investigating and enforcing against trade sanctions violations, OTSI is also able to act in respect of compliance failures where entities are unresponsive to information requests or in breach of reporting requirements. The key powers it has are discussed below:
OTSI retains flexibility to moderate its response to a breach of sanctions laws or reporting requirements. The UK government's guidance highlights the mitigating factors that OTSI can consider in its evaluation of the circumstances. Timely disclosure of suspected breaches, compliance with recordkeeping rules and compliance systems that are proportionate to the business's resources and sanctions exposure may lead OTSI to reduce the penalty imposed. By contrast, previous breaches or obstructive behaviour, amongst other things, are seen as aggravating factors and may trigger a more severe response.
The TASS Regulations are a clear signal that the UK government intends to further strengthen its ability to monitor, investigate and pursue enforcement actions against entities failing to comply with sanctions law. The TASS Regulations come into force amid recent high-profile enforcement actions, including HMRC's £2.3 million fines against seven exporters and the Financial Conduct Authority's fine against a UK bank for failures to conduct adequate financial sanctions screening.
Given the strict liability regime, companies will need to evaluate whether their internal compliance procedures are fit for purpose and adapt their procedures in line with OTSI's guidance. Financial institutions should also consider whether they are currently able to comply with their reporting requirements.