Sanctions: Voluntary disclosure reduces fine by 50%
The Solicitors Regulation Authority (SRA) has stressed the importance of voluntarily disclosing breaches of the Russia sanctions following the first fine handed out under the regime.
The Office of Financial Sanctions Implementation (OFSI) fined a small concierge company for mainly Russian and Ukrainian nationals £15,000 after it provided property management services to a designated person (DP) under the Russia sanctions who owns a residential property in the UK.
It provided the services since 2015, including collecting rent from tenants, and organising and paying for routine maintenance, repairs and insurance. The value from when the client was designated was £15,500.
The company – Integral Concierge Services Ltd (ICSL) – also made several transfers between bank accounts which dealt with the DP’s funds.
All of the payments were made without a specific licence from OFSI, which said it may have granted one had Integral applied for it.
In a note on the decision, the SRA said the most relevant point for law firms to note related to OFSI’s policy on voluntary disclosure, which did not happen in this case.
OFSI said: “This case emphasises the importance of entities or persons voluntarily disclosing breaches of the regulations to OFSI…
“OFSI considers voluntary disclosure under Case Factor J as to the enforcement action taken, and if a penalty is imposed, will make up to a 50% reduction in the final monetary penalty amount to a person who gives a prompt and complete voluntary disclosure.”
Five of the ten monetary penalties OFSI has imposed to date in relation to all sanctions did not involve voluntary disclosures.
OFSI said ICSL “either knew or had reasonable cause to suspect” that it was in breach of the sanctions.
During the investigation, ICSL admitted that it did not believe it was necessary to seek guidance about the sanctions regime, even though its knowledge of sanctions was, by its own admission, extremely limited.
“ICSL’s actions reduced the disruption which ought to have been caused to the designated person through the asset freeze, which blunted the intended effect of applying pressure to DPs, encouraging Russia to cease its illegal actions in Ukraine,” OFSI said.
ICSL co-operated with the investigation by providing information on breaches it had committed of which OFSI was not yet aware.
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