Comply with UK financial sanctions

Financial sanctions apply to every individual and business in the UK, including its territorial sea, and to every UK national and every business set up under UK law, wherever they operate in the world. Branches of UK businesses are covered too. The Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, enforces them.

Screen who you deal with

Check customers, suppliers and other counterparties against the UK Sanctions List, which names every person, entity and ship subject to UK sanctions.

The law sets no screening method, but you need to find out who you are really dealing with and repeat the checks when something changes, such as a new director, a change of owner or a new product or service.

Look through to owners and controllers

An asset freeze also covers any entity that a designated person owns or controls, directly or indirectly, even when the entity is not on the list. Beyond a stake of more than 50%, a designated person controls an entity if they can appoint or remove a majority of its board, or could reasonably be expected to ensure that its affairs are run as they wish.

A minority stake does not trigger the freeze by itself, but watch for the stake rising above 50% or for signs of control. Holdings of different designated persons are not added together unless they act jointly or one controls the other's rights.

Check sector-wide sanctions separately

Some sanctions cover whole sectors, or any person connected with a country, rather than named individuals, so the list cannot show them. Read the statutory guidance for each regime that touches your trade.

Freeze and report if you find a match

Freezing means blocking access. You do not confiscate the assets or hand them to OFSI, and ownership does not change. A bank must also tell OFSI without delay whenever it credits a frozen account. Include the designated person's Unique ID or Group ID and the nature and amount of what you hold in your report.

The OFSI report is separate from your other reporting. A suspicious activity report to the National Crime Agency or a report to your own regulator does not meet the OFSI duty, and an OFSI report does not replace them. Information covered by legal professional privilege is exempt.

If you reported frozen assets last year and no longer hold them, you must send a nil return. Failing to report without reasonable excuse is an offence.

Get a licence to deal with a designated person

You cannot deal with frozen assets or make funds available to a designated person unless an exception in the regulations applies or you hold a licence. OFSI issues licences only on the grounds set out in each regime's regulations.

OFSI expects you to use a general licence where one covers your activity. Each sets its own conditions for notifying OFSI, keeping records and reporting, and breaching its terms carries the same maximum prison terms as breaching the sanctions themselves.

There is no fee for a specific licence. OFSI gives priority to humanitarian cases and those with a risk to life. Do not go ahead until you hold the licence. Giving false or misleading information in an application is an offence.

Penalties and enforcement

OFSI can also issue a warning letter or publish details of a breach.

Breaching a prohibition is a criminal offence with a maximum of 7 years in prison on conviction on indictment anywhere in the UK. On summary conviction the maximum is 12 months in England, Wales and Scotland.