OTSI posts best practice advice after bank’s near miss with UK sanctions breach

The government sanctions body revealed in a blog post that payment for prohibited goods was routed through the UK branch of an unnamed multinational bank.

Screening by the UK branch identified trade sanctions risk associated with the payment and enhanced due diligence carried out. The UK branch subsequently decided not to proceed with the transaction and reported the matter to OTSI.

Investigations by the sanctions body concluded there had not been a breach of sanctions by the UK branch.

Stacy Keen, an expert in financial crime enforcement with Pinsent Masons, said: “This scenario highlights that the financial services market is exposed to trade sanctions risk, alongside financial sanctions risk”. 

“In most instances, a trade restriction on the movement of restricted goods, technology and software is accompanied by a restriction on the provision of services related to that movement.” 

“As the blog from OTSI highlights, this can include providing a bank account or handling a payment.”

The sanctions body said the case highlighted “how good due diligence can prevent breaches of UK trade sanctions regulations” and gave examples on the best practice organisations should follow to avoid committing a sanctions breach.

This includes understanding how UK sanctions prohibitions impact the financial sector and multinational corporate structures, carrying out enhanced due diligence on clients, and having safeguards in place to stop transactions and payments which might constitute a breach