Potential for More Aggressive UK Enforcement including conduct outside the United Kingdom
The Brexit transition period is now over. The UK’s new, standalone sanctions regime, which applies throughout the UK and includes Northern Ireland, has officially come into force as of 11 p.m. on December 31.
The Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”), the cornerstone of the United Kingdom’s new autonomous sanctions regime, gives the United Kingdom the power to diverge from EU sanctions in a number of critical ways.
SAMLA will also provide a post-Brexit mechanism for the United Kingdom to satisfy its obligation to impose UN sanctions. During transition, UN and EU sanctions will continue to be implemented in the UK through EU law.
While, historically, EU member states have only minimally enforced sanctions violations, the United Kingdom has provided indications of increased enforcement to come – imposing its first monetary penalties through the relatively newly established OFSI, and given high marks from FATF for its measures in promoting the global use of financial sanctions.
Additionally, based on recent guidance, OFSI seems intent on continued enforcement activity, setting out a framework to define the UK nexus that could bring conduct outside the United Kingdom within the scope of OFSI enforcement.
For example, OFSI announced in post-Brexit guidance that it intends to apply sanctions restrictions to
- persons who “undertake activities within” UK territory –in addition to UK citizens, UK-registered entities, and those located within the United Kingdom.
This means, for example, that
- companies incorporated outside of the United Kingdom could be subject to OFSI sanctions enforcement when selling products to UK customers.
Additionally, in its 2017 guidance OFSI suggested that it could
- exercise jurisdiction over transactions using UK clearing services, actions taken overseas but directed from within the United Kingdom, and financial products or insurance bought on the UK markets but held or used overseas.