Financial sanctions

We predict in 2021

The number of penalties imposed by OFSI will double.

The picture in 2020

• OFSI imposed its biggest penalty to date under the civil monetary penalties regime (£20.47m) relating to breaches of the investment ban restrictions in place on a number of Russian-owned banks and companies and their non-EU subsidiaries. This matter brings the number of cases in which penalties have been imposed to 4 since 2017, when the civil penalties regime was adopted. Previous penalties have been significantly lower with the highest previously imposed of £146,341 in 2019.
• The UK’s first autonomous sanctions regime was implemented: the Global Human Rights regime. The sanctions follow the adoption of human rights legislation by other jurisdictions including the Magnitsky sanctions in the US in 2016. Unlike the Magnitsky sanctions, the UK regime does not allow for designations to be made in respect of allegations of corruption.
• The EU also adopted a global human rights sanctions regime in December 2020. This introduced restrictive measures against serious human rights violations and abuses.
• New legislation and guidance was issued throughout the year in preparation for the end of the Brexit transition period including general sanctions guidance on the UK’s new autonomous regime.

Looking ahead to 2021

• We predict that the number of civil enforcement outcomes will double during 2021 as OFSI grows in confidence as a world-leading sanctions authority.
• With the UK’s autonomous sanctions regime taking effect in January, new designations under existing sanctions may be made. A new UK sanctions list will be maintained by FCDO.
• OFSI will also have the ability to implement its own new sanctions where considered necessary and a divergence in policy approach between the UK and EU may begin to emerge.
• The EU will designate individuals and entities under the new global human rights sanctions regime.

What does this mean?

• We expect 2021 to be a pivotal year for OFSI as it will be keen to build on its enforcement track record and demonstrate its independence from the EU as an autonomous sanctions administrator. In order to minimise the risks of sanctions breaches, it is critical that businesses ensure they are up to speed with the differences between new UK and existing EU sanctions, and with OFSI’s new approach to licensing.