Expect increased enforcement on financial sanctions with launch of Office of Financial Sanctions Implementation, says expert

OFSI is a unit that has been set up within the UK Treasury to help businesses comply with financial sanctions and take enforcement action when they are breached. The OFSI became operational on Thursday.

Plans for the OFSI to be set up were first announced in UK chancellor George Osborne's summer Budget speech in July last year.

In a new statement Osborne said: "Financial sanctions are a hugely important foreign policy and national security tool. Their effective implementation and enforcement are vital to their success."

"OFSI will be a centre of excellence for financial sanctions, raising awareness and providing clear guidance to promote compliance with financial sanctions, providing a professional service to the public and industry, and working closely with other parts of government to ensure that sanctions breaches are rapidly detected and effectively addressed," he said.

Under proposals contained in the Policing and Crime Bill companies and individuals that breach financial sanctions could face new penalties, ranging from fines to up to seven years imprisonment.

"The establishment of this new office will undoubtedly lead to increased enforcement of financial sanctions," expert in financial sanctions and regulatory risk Stacy Keen of Pinsent Masons, the law firm behind Out-Law.com, said. "Coupled with the proposal to increase maximum prison sentences and introduce civil penalties for breaches of financial sanctions, the stakes are being raised for those found to be dealing with designated persons. Due diligence and sanctions screening on counterparties, those that own or control such parties and end users of supplies, will be key in ensuring compliance."