Review of sanctions implementation and enforcement

Currently in the UK, implementation and enforcement of financial and trade sanctions, as well as export controls, is the responsibility of several different agencies (OFSI, OTSI, NCA, ECJU, and HMRC). Matters may fall within the jurisdiction of more than one of them, potentially resulting in confusion, inconsistency and inefficiencies. Perhaps mindful of this, and the relatively small number of penalties that have been issued for sanctions breaches so far, the Government initiated a review towards the end of last year led jointly by a range of bodies with sanctions responsibilities including the Foreign, Commonwealth and Development Office, the NCA and HMRC. The conclusions from this review were published on 15 May. 

The stated aims of the review were to improve and facilitate compliance; to increase the deterrent effect of enforcement; and to invigorate the cross-Government toolkit.  It has resulted in a plan much of which the Government intends to commence in the course of the current financial year.

To improve and facilitate compliance, the Government is aiming to deliver a comprehensive update of the sanctions pages and statutory guidance on GOV.UK to make it clearer and better structured. There should be further clarity on ownership and control issues. It also says that it will amalgamate the UK Sanctions list and HM Treasury's Consolidated list of asset freeze targets. Not before time, this should create clearer guidance and a single list to screen for designated persons. 

On enforcement, the Government says that it will publish details of sanctions enforcement action on a regular basis to take advantage of what it describes as "teachable moments". It also intends to develop and publish a cross-government enforcement strategy. Currently, only HMRC has a penalty settlement system and this has accounted for the bulk of the penalties for export controls and trade sanctions breaches issued to date.  The review concluded that the lack of a more comprehensive early settlement scheme for sanctions breaches was a weakness which will now be addressed. Proposals for a new scheme will therefore be developed for public consultation, presumably before April next year. The review also identified the lack of fast-track penalties for certain types of breach as a weakness of the current arrangements. Again, a process for this type of penalty will be developed and put out for public consultation. 

Finally, regarding the Government toolkit, the review focussed on the existing multiple reporting channels which it correctly labelled as confusing, and which are often duplicative. The viability of a single reporting channel will be explored. Steps will also be taken to ensure that workers who disclose prescribed information relating to breaches of financial, transport, and certain trade sanctions will qualify for whistleblowing protections.

Longer term aims identified by the review include exploring options for more effective collaboration between agencies on intelligence, including the merits of a new joint sanctions intelligence function.

To the extent that these changes help to reduce the current confusions and duplication within the system and produce a more joined up approach from government, they will be welcome. What is currently less clear is how the proposed new settlement schemes and fast track penalties will work in practice and when they are likely to be implemented. The review conclusions contain little or no detail on the proposals themselves and the commitment appears to be just to produce consultations during the current financial year. We await them with interest.