Introduction
On 10 November 2022, UK’s Office for Financial Sanctions Implementation (OFSI) published its annual review for the period of April 2021 to August 2022.
The crux of this annual review was the effect of sanctions on Russia following its invasion of Ukraine in February 2022.
OFSI highlighted how the consequences of Russia’s actions in the Ukraine had caused OFSI to put in place “the most stringent financial sanctions in history.”
The severity and pro-activeness of the response is highlighted in the annual review as follows:
1. Freezing of Russian Assets
Between February 2022 and 20 October 2022, £18.39 billion worth of Russian assets have been reported as frozen to OFSI.
In comparison, in September 2021, only £44.5 million of Russia assets were frozen, demonstrating a strong uplift in the enforcement against Russia.
2. General Licences
OFSI has issued 33 general licences in connection with the Russian regime since the start of the invasion to 24 August 2022.
The issuing of general licences allows multiple parties to undertake special activities without the need to request a specific licence to OFSI. General licences cover a wide range of special activity permissions including: the winding down of accounts and transactions connected to Russian banks and securing energy supplies in Europe and beyond.
This streamlines the procedure for licences and increases the decision-making process.
3. Breach Reports
In the review, OFSI emphasises that enforcement remains an area of “continued importance.”
Since Russia’s invasion, OFSI has received 236 breach reports and has increased its enforcement powers through the Economic Crime (Transparency and Enforcement) Act 2022. This act imposes a strict civil liability test for breaches of financial sanctions as OFSI pushes for companies to remain diligent on sanction checks.
4. Changes to the OFSI Consolidated List – February 2022 to August 2022
OFSI added 1,271 new Russia regime designated persons to its consolidated list.
Accounting for additions, amendments and removals, there were over 2,300 changes to the Russia regime designations on the list.
OFSI’s Resources and Future Plans
Keeping tabs on this regime takes significant resources.
The review confirms that only two financial penalties totalling £86,393.45 have been issued in the last financial year.
The OFSI’s plans include:
- Aims to diminish fears over its speed and depth of enforcement power by announcing its intention to have over 100 full-time employees by the end of 2022 (compared to 45 at the start of 2022). This is armed further by OFSI’s increased enforcement powers under the previously mentioned Economic Crime (Transparency and Enforcement) Act 2022. This includes a new strict civil liability approach to breaches of financial sanctions.
- A new power to publicise details of financial sanctions breaches, even where no monetary penalty has been imposed (although it is worth noting that most of OFSI’s enforcement action has not been publicised).
- Widening powers to make broader provision for the sharing of sanctions’ information between government organisations.
Through these plans, it is clear that the UK government together with other nations and international organisations are committed to continuing the imposition of nuanced and complex financial and trade sanctions on Russia. Clients, companies, and individuals will need to be cautious in how they navigate these ever-changing obligations.
How we can help
Rosenblatt has a wealth of experience and is well-equipped to support and advise companies and individuals on how to navigate sanctions.
For enquiries, please contact Anil Rajani, Dispute Resolution Partner and Head of our sanctions team (anil.rajani@rosenblatt.co.uk) or Ben Siskind, Dispute Resolution Solicitor (ben.siskind@rosenblatt.co.uk.).
