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Office of Financial Sanctions Implementation: an introduction

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Welcome to the OFSI blog, a space for us to tell you a bit more about what we do and keep you up to date on what’s going on in the world of financial sanctions. I’m Rena Lalgie, head of OFSI.

We’re all seeing an increase in the importance of sanctions as an alternative to conflict and a vital tool in responding to national security and global threats. International news coverage provides us with the strongest impetus – we’re regularly confronted with the reality of human rights abuses and dictatorial rule, nuclear proliferation and undemocratic governance. Sanctions help us fight this and target individuals and organisations to minimise the impacts on already vulnerable parts of society.

Country flags flying at the UN

The UK prefers to impose multilateral sanctions, agreed and implemented by a number of countries, as history shows these to be most successful. We implement UN and EU sanctions or, in cases involving terrorist activity, the UK’s own financial sanctions and restrictions.

Sanctions can take the form of arms embargoes, trade sanctions, travel bans and financial sanctions. OFSI implements financial sanctions including targeted asset freezes and restrictions on financial services. Today we’re implementing 29 financial sanctions regimes targeting around 2,000 individuals and entities.

How do we implement sanctions?

We raise awareness of financial sanctions by talking to people – we had over 100 engagements last year – and by publishing guidance. We have a helpline you can contact during office hours. We opened 133 breach cases in 2017 and are updating our reporting forms to assist compliance. We report the most serious cases to the National Crime Agency (NCA) for further investigation. We can also issue licences, for example to allow humanitarian aid or the payment of legal fees, in a way that otherwise would be unlawful.

Statue of Justice standing on coinsWe keep in mind what sanctions are trying to achieve when considering licence applications and potential breaches. Breaching sanctions can have real consequences such as allowing targets access to financial markets, enabling them to continue their offending behaviour.

As the UK’s economic ministry, working to achieve strong and sustainable economic growth is at the heart of what the Treasury does. We recognise that compliance has a cost to business. That’s why we have spent the last two years working closely with the business community on guidance, ensuring more businesses understand what financial sanctions are and what it means to be compliant. We want to encourage legitimate business both in the UK and abroad while at the same time ensuring that our sanctions regimes are upheld. Our enforcement aims to be coherent and appropriate.

Looking ahead

EU and UK flag in front of Big Ben

2018 is a year of preparing for change.

The Sanctions and Anti-Money Laundering Bill is now at the committee stage in parliament. At present around half our sanctions’ regimes derive from the EU, so the bill needs to enable the UK to continue to implement sanctions after Brexit. We’re continuing our work with external stakeholders on guidance, helping them to understand any changes to sanctions post-Brexit, such as new licensing processes.

Building our capability and continuous improvement of our processes has been an important part of leading OFSI over the last couple of years. This quarter, ensuring we are complying with the General Data Protection Regulations and revising our reporting forms are on the agenda.

Because financial sanctions are most effective when they are implemented and enforced across countries, we’ve been working closely with international partners to share best practice and build bilateral and multilateral relationships and are keen to do more.

This blog is just a start. We’d like to hear from you. Leave a comment, tell us what you’d like to know about financial sanctions, or follow this blog.

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