UK OFSI rejects discount and imposes £50k fine for Russia Sanctions breach [SEPTEMBER 1, 2021]
- On August 5 2021, the Office of Financial Sanctions Implementation ("OFSI ") imposed a GBP 50,000 penalty on TransferGo Limited ("TransferGo ").
- OFSI sanctioned TransferGo, a UK FinTech company, for breaching UK sanctions after issuing instructions to make payments to accounts held at the Russian National Commercial Bank ("RNCB "), a designated party.
- Between March 20 2018, and December 18 2019, TransferGo issued instructions to make 16 payments into accounts held at RNCB, the total value of which was GBP 7,764.77.
- OFSI considered that these payments constituted a breach of UK sanctions and that TransferGo knew or had reasonable cause to suspect that the payments were in violation of the UK sanctions.
- OFSI's view was that TransferGo erred in assessing whether payments to RNCB were subject to financial sanctions restrictions.
- TransferGo contested
- That as the account holders were not designated persons,
- The payments into their accounts were not breaches of UK financial sanctions.
- OFSI considered that
- Funds held by customers of RNCB in an RNCB bank account should ultimately be viewed as belonging to RNCB.
No 50% discount - TransferGo did not voluntarily disclose
- TransferGo did not voluntarily disclose the transactions and
- Only disclosed some transactions in response to OFSI's information requests.
- Therefore, TransferGo did not receive the 50% discount on the baseline penalty amount available for voluntary disclosure.
- To gain the benefit of voluntary disclosure in OFSI's case assessment and any subsequent penalty, which can result in a 50% reduction of the baseline penalty amount, disclosure should be:
- "As soon as reasonably practicable" and "include all the evidence relating to all the facts of the breach ".
- As shown by TransferGo's penalty, this disclosure must be proactive.
- OFSI will not consider a disclosure voluntary
- If it is in response to information requests,
- In response to prompts during a case assessment or
- Disclosure prompted or required by law in separate law enforcement or regulatory investigation.
- This penalty decision underlines OFSI's position that
- Transfers to an account of a designated bank,
- Even when the accounts are not held by designated persons, are regarded as making funds available indirectly for the benefit of a sanctioned person and
- Therefore are a breach of UK financial sanctions restrictions.