New UK Sanctions Agency Will Publish Fines, May Request Due Diligence Info

Although the agency said it will primarily oversee civil monetary penalties for sanctions breaches, it said companies or people that don’t comply with its reporting requirements of information requests could face criminal penalties, including prison time.

The U.K. will set up the new office as the country and its trading partners implement record numbers of sanctions and trade controls against Russia for its war against Ukraine. It said its purpose will be to work “with our partners across government and in industry to help ensure that businesses understand trade sanctions, and that they are properly implemented and enforced in the United Kingdom.”

The office will oversee:

• the provision or procurement of sanctioned trade services
• the movement or acquisition of sanctioned goods outside the U.K.
• the transferring or acquisition of sanctioned technology outside the U.K.
• provision of “ancillary services” for the movement, transfer or acquisition of those goods and technology outside the U.K.

OTSI will specifically focus on sanctions enforcement involving “UK services and overseas trade with a UK nexus,” it said. “The office will be able to impose monetary penalties, and where a civil monetary penalty can be imposed for a breach, breaches may be determined on a ‘strict liability’ basis. Penalties can be imposed on the basis of the civil standard of proof -- the balance of probabilities.”

“This means OTSI does not need to prove that you acted knowingly, or with intent,” the office said. “If you use as a defence that you did not know you’d committed a breach, or had no reasonable cause to suspect, they can disregard this when they’re deciding whether to issue a penalty.”

The office can impose a maximum 1 pounds million (about $1.3 million) for sanctions violations or a penalty of 50% of the “value of the breach” -- whichever is higher. OTSI will be able to make “public disclosure of breaches.”

The new office will also have powers to request information from people or companies that it suspects of violating U.K. sanctions. People and companies must provide the information -- which may include bank documents, bills of lading, commercial invoices, end use certificates, export and import licenses, a “risk assessment” document and a “due diligence report” -- within a timeline specified by OTSI, the office said. People and companies that don’t have those documents, “must take reasonable steps to obtain them.”

Parties that fail to provide those documents or information, or that give false information to OTSI, could face criminal prosecution or a civil fine, the office said.

Along with overseeing sanctions violations that take place outside the U.K., the new office also will have powers to investigate sanctions circumvention; companies or people that fail to comply with the conditions of an import or export license or “notification requirement of an exception; and recordkeeping violations. It can investigate all people or companies “established” under U.K. law “wherever they are in the world” as well as all people or companies conducting activities within U.K. territory.

The country’s revenue and customs agency will continue to be responsible for enforcing sanctions related to imports or exports to or from the U.K., including technology transfers or the provision of services involving dual-use and military goods.