UK sanctions body gains tough new criminal and civil enforcement powers

HM Treasury's office of financial sanctions implementation (OFSI) will have new enforcement powers from April 2017 under the Policing and Crime Bill. The powers include a harmonized seven-year maximum custodial sentence on conviction on indictment, and an up-to-£1-million civil fine for sanctions breaches, it said.

"We will ensure that sanctions breaching is effectively dealt with in the UK," said Rena Lalgie, head of OFSI, told ACAMS' annual conference.

She said the UK government had seen a clear rationale for OFSI, which it established within the Treasury from March 31 this year, to ensure that financial sanctions make the fullest contribution to national security and foreign policy. The OFSI's role is to ensure financial sanctions are understood, implemented and enforced.

Lalgie said the Policing and Crime Bill would bring harmonised custodial sentences of seven years maximum on conviction on indictment, or of six months on summary conviction.

According to Lalgie, the bill will introduce new powers for UK sanctions to be implemented without delay, for 60 days, extendable to 90 days, on a temporary basis, which can be exchanged into the European Union legislation.

She said the bill will introduce deferred prosecution agreements, which can, however, be suspended, for example, to implement a financial penalty. Serious crime prevention orders will come in.

According to Lalgie, the OFSI may impose civil monetary penalties, with a maximum penalty of £1 million or 50 percent of value of assets, whichever is greater. "We'll consult later this year on how we impose the penalty and level of penalties."

"For OFSI, increasing penalties is not our main objective. We aim to improve compliance," Lalgie said.

"We'll be fair and balanced in using these powers. We will engage with those who seek to comply, and provide advice. Our response will be proportionate; we will not treat small cases as more serious just because have a much stronger process in place."

She said she wanted OFSI to engage with all parts of the industry and to engage in dialogue with what it takes to provide a high quality service. The OFSI will publish updates on its web site to reflect changes in case law.