OFSI issues updates to monetary penalties and licensing guidance

On 10 March 2021, OFSI published an updated version of its Monetary Penalties for Breaches of Financial Sanctions Guidance. The updated Guidance, which came into force on 1 April 2021, will be used by OFSI to assess any potential breaches occurring after that date.

The new Guidance incorporates lessons from several monetary penalties imposed by OFSI and clarifies OFSI’s position on a number of issues such as self-reporting, penalties, and jurisdiction. See our full alert here.

More recently, on 19 April 2021, OFSI updated its blog to provide an overview of the licensing process, explaining changes to the new standalone UK sanctions regime, and tips on how to complete a licence application.  As defined by OFSI, a licence is written permission to carry out an act that would otherwise be in breach of financial sanctions prohibitions.

The first step is to fill out the new licence request form which can be found on OFSI's website. OFSI suggests this include information such as:

• what you are requesting (e.g. exact amounts and payment routes)
• the legal basis for the request (e.g. legal fees) - with reference to the specific legal grounds set out in the relevant regulation
• the urgency of the application, including hard deadline – note humanitarian applications will be given priority when possible

OFSI also will "require evidence to substantiate [the] application" and states that the surest way to avoid potential delays is to provide detailed evidence at the initial application stage. OFSI may ask follow-up questions.  

Where an application is to amend a licence that existed prior to the new UK Sanctions and Anti-Money Laundering Act (the Sanctions Act) coming into force, OFSI advises to check the legislation carefully as legal grounds to amend it could be substantially different. Certain licensing grounds, such as for the “Maintenance of funds and frozen resources” or legal fees, have a reasonableness requirement. The applicant has the burden to provide evidence and arguments as to why a payment is reasonable. For example with legal fees, OFSI may request a breakdown of the proposed work and payment schedule. OFSI director Giles Thomson stressed this requirement in a recent live briefing. 

Once OFSI has made a decision they will share a draft version of the licence with the applicant to allow for any necessary corrections to be made.

For any questions about the new sanctions requirements or guidance, please reach out to us.