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UK guidance means importers and exporters must be sanctions-aware

The UK Office of Financial Sanctions Implementation (OFSI) has issued new guidance for import and export businesses on complying with financial sanctions.15 May 2018

The guidance includes direction on how to identify individuals and companies subject to sanctions, and how UK companies should deal with those entities.

Regulatory expert Tom Stocker of Pinsent Masons, the law firm behind Out-Law.com, said the guidance emphasised the risk of sanctions breaches to those engaged in importing and exporting products and services.

“The guide is significant because it shows that OFSI do not see sanctions compliance purely as a matter for banks and payment processors,” Stocker said.

“Given that businesses commit a criminal offence if they do business that is connected with a sanctioned person when there is ‘reasonable cause to suspect’ that is the case, importers and exports should carefully consider the recommended compliance steps, which includes screening suppliers, contractors and customers against sanctions lists, and being alert to the red flags listed in the guide,” Stocker said.

The guidance follows the introduction of regulations last year which significantly extended the duty to report breaches of financial sanctions. The regulations require auditors, casinos, dealers in precious metals and stones, estate agents, external accountants, independent legal professionals, tax advisers, and trusts or company service providers to file a report if they discover a breach of financial sanctions regulations.

Previously only banks, financial institutions, certain EEA credit institutions, and currency exchange businesses were obliged to report.

Stocker said OFSI was making a significant effort to ensure financial sanctions were properly understood, implemented and enforced.

“This guide is published against the backdrop of OFSI’s relatively new power to impose significant monetary penalties of the greater of £1 million or 50% of the total breach. Given the monetary penalties, it is more important than ever for businesses to understand their obligations under the UK’s financial sanctions regime and what action to take on identifying a breach,” Stocker said.

OFSI was granted new powers to impose penalties under the Policing and Crime Act 2017, which came into force on 1 April last year.

In the guidance, importers and exporters are urged to consider financial sanctions when importing or exporting goods to or from the UK. The guide sets out OFSI licensing requirements for UK companies and reminds them what to do in the event of a breach.

Sanctions against Russia and Iran in particular have been back in the news lately. In April the US added more companies and individuals to the list of those impacted by sanctions against Russia. Last week the US said it was re-imposing economic sanctions against Iran that were lifted in 2016, following the US withdrawal from the joint comprehensive plan of action agreed in July 2015 to limit Iran’s nuclear programme.