Law Firm: UK Sanctions Enforcement Review Could Lead to More Scrutiny, Probes
The U.K.’s ongoing public consultation about how it can improve its civil enforcement of financial sanctions (see 2507220056) -- including whether it should increase its maximum penalty amounts -- could lead to “greater scrutiny” and more investigations, Akin said this week in a client alert.
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The law firm noted that one of the proposed changes could raise the U.K.’s statutory maximum for civil penalties from 1 million pounds (about $1.3 million) or 50% of the value of the violation to a maximum of 2 million pounds (about $2.6 million) or 100% of the estimated value of the breach, whichever is greater.
The U.K.’s Office of Financial Sanctions Implementation may also choose to take an “even more strict approach” to voluntary disclosures, Akin said. The U.K. currently offers reduced penalties for “prompt and complete voluntary self-disclosure,” with discounts as high as 50% for serious cases and up to 30% for the most serious cases. One change under consideration would establish the maximum penalty discount at 30%, which would be available only “where the disclosure and cooperation is complete and timely,” Akin said.
The firm said OFSI is looking to make sure companies aren’t “perversely more incentivised to make disclosures in cases which are serious, but not most serious (because the discount available would be lower in the latter case).” It also wants disclosing parties to “make the self-disclosure as soon as practicable, providing a complete account of the circumstances,” and to cooperate with the agency’s investigation.
Akin also noted that the “timeliness of a self-report is a matter of some concern for OFSI at present,” pointing to a recent penalty against pharmaceutical company Colorcon for making unlicensed payments to sanctioned Russian banks (see 2509300023). Colorcon waited four months to make a disclosure after first becoming aware of the violation, the law firm said, so OFSI gave the company a 35% penalty reduction instead of the 50% off for a “prompt” disclosure.
“Under the newly proposed regime, we might expect OFSI to take an even more strict approach,” Akin said.
Other potential changes could revise how OFSI decides whether to agree to a settlement with a sanctions violator. “OFSI has said that it does not propose to offer the settlement scheme in circumstances where the breaches were committed knowingly or intentionally, where the subject is or has previously been suspected of circumventing financial sanctions (including where the proposed breach relates to circumvention), or when the subject has not cooperated with OFSI in good faith,” Akin said.
The law firm stressed that it’s still unclear what types of changes OFSI will make. “Assuming that some form of these changes are implemented, firms should be mindful that any interaction with OFSI’s enforcement teams may be more structured, and it may be necessary to engage counsel earlier in order to ensure the best outcomes.”
Comments on the consultation are due to OFSI by Oct. 13.