New sanctions unit launched with ‘enhanced powers’ to fine businesses

The UK government has launched a new unit to crackdown on businesses that are in breach of UK sanctions, in an effort to strengthen Britain’s sanctions regime.

Launching today is the new Office of Trade Sanctions Implementation (OTSI), a new unit that sits as part of the Department for Business and Trade.

The OTSI will not be replacing the Office for Financial Sanctions Implementation (OFSI), but will be sitting alongside it in a separate office. OFSI, which was established in 2016, sits within HM Treasury.

The view of OTSI is to work with businesses to comply with the UK’s trade sanctions, while also having more “enhanced powers” to crack down on businesses in breach with civil monetary penalties.

This launch also sees new reporting obligations introduced for financial services firms, money service businesses and legal service providers. As these businesses will now be expected to inform OTSI of suspected breaches of certain trade sanctions.

OTSI’s new enforcement powers complement those HMRC already has, but as HMRC remains responsible for the enforcement of trade sanctions on goods that cross the UK border.

OTSI now has lead enforcement responsibility for sanctioned services leaving the UK, as well as trade in sanctioned goods globally, where a UK business or person is involved.

The new unit will also make complying with sanctions obligations “as straightforward as possible” by issuing guidance to businesses and providing “user-friendly online tools”.

Following Russia’s invasion of Ukraine, the government implemented a comprehensive set of sanctions, with over £20bn worth of trade with Russia now sanctioned.

The Secretary of State for Business and Trade, Jonathan Reynolds MP, noted that “sanctions are vital in defunding Putin’s illegal war and only by working hand in hand with business can we make them as effective as possible.”

While, Chloe Cina, international sanctions expert and Royal United Services Institute (RUSI) fellow, added: “Investing in a new specialist unit to issue guidance, grant licences, and enforce certain trade sanctions across 21 UK regimes is compelling evidence that the novel measures introduced as part of the UK’s response to Russia’s invasion of Ukraine are here to stay.”

This comes as it was revealed last November, that nearly 130 UK companies voluntarily disclosed to breaching Russia-related sanctions.