On 1 April 2017, the sanctions-related provisions of the Policing and Crime Act 2017 (the “Act“) came into force, bringing in significant changes to the UK financial sanctions enforcement landscape.
As described in our previous blog posts on the subject, the changes brought in by Part 8 of the Act are:
In conjunction with these developments, OFSI has issued the final version of its guidance on civil monetary penalties, which sets out OFSI’s approach to imposing penalties.
What are the implications of these developments?
These new measures represent a significant strengthening of the UK’s sanctions enforcement capabilities. Maximum prison sentences for individuals found guilty of sanctions-related offences have more than trebled in length, and OFSI is now capable of levying significant penalties against companies that have committed sanctions breaches, without resorting to criminal prosecution. Meanwhile, the availability of DPAs and SCPOs in respect of sanctions breaches grant the National Crime Agency (“NCA“) and the courts new, flexible tools with which to penalise sanctions breaches whilst encouraging compliance.
These changes underscore the importance of robust compliance programmes in businesses that face sanctions risks. As discussed below, the introduction of civil monetary penalties, DPAs and SCPOs in particular give the UK authorities powerful tools both to punish sanctions breaches and to require compliance on an ongoing basis.
The new civil monetary penalties regime, which can be used to punish any UK sanctions breach, means that fines can now be imposed for sanctions breaches on a lesser, civil standard of proof, and without a full criminal trial. We expect this to lead to an increase in the number of enforcement actions against companies suspected of being in breach of UK/EU sanctions.
Reductions in penalties of up to 50% will be available for voluntary disclosures of sanctions breaches, depending upon the severity of the breach. Once imposed, OFSI will normally publish a summary of the penalty.
DPAs and SCPOs
DPAs and SCPOs are flexible tools that can be used in order to ensure compliance by companies in breach on a continuing basis.
A DPA is an agreement between a company in breach and the prosecutor, under which the company agrees to take action to rectify its breach (including the payment of a penalty), as well as agreeing to other conditions designed to ensure continued compliance with the authorities and with the law. In return, the prosecutor agrees to suspend prosecution, provided that the company complies with the conditions of the DPA. DPAs are bespoke arrangements tailored to the individual breach, and have provided the basis for a number of successful enforcement actions by the Serious Fraud Office over the past two years, including against Rolls Royce and Tesco.
SCPOs are measures imposed by the courts, either instead of or in addition to a criminal prosecution, and have been used in relation to a wide variety of serious crimes. SCPOs can set out a broad range of requirements, restrictions and prohibitions intended to prevent the commission of serious crimes. Breach of an SCPO is a criminal offence, carrying penalties of up to five years’ imprisonment and/or a fine.
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