We anticipate that 2024 will be the year that we receive further clarity on sanctions that have been somewhat challenging to understand and apply to date. More enforcement action should provide a better understanding of both the potential penalties that the Office of Financial Sanctions Implementation (OFSI) will impose and its expectations when it comes to sanctions' compliance programmes.
The government continues to broaden the scope of the Russia (Sanctions) (EU Exit) Regulations 2019, as it has done since the invasion of Ukraine by Russia in March 2022. The latest amendment to the regulations entered into force on 30 June 2023. Given the geopolitical climate and the ongoing war in Ukraine, we do not anticipate that the sanctions against Russia will abate any time soon.
The key focus for 2024 will be increased enforcement action by OFSI. This follows the introduction of strict liability civil sanctions offences in 2023, which makes it much easier for OFSI to find that there has been a sanctions' breach.
Most recently, OFSI published updates to its Enforcement Guidance on 31 August 2023, providing useful insight into how OFSI will categorise sanctions' breaches for penalty calculations. On the same day, we saw OFSI flex its newfound powers to make Disclosure Reports – publicly naming organisations or individuals in cases where a warning is too lenient but a monetary penalty disproportionately punitive. We expect OFSI to publish more Disclosure Reports in 2024.
Businesses should keep a close eye on guidance and enforcement actions by OFSI to keep up with the key issues and be ready to mitigate sanctions risks internally. There are various proactive steps that business can take to safeguard themselves, including performing a thorough sanctions risk assessment and completing a review of existing sanctions policies and procedures to identify any gaps.
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