On 21 February, the UK Office of Financial Sanctions Implementation (“OFSI“), announced that it had issued a monetary penalty totaling GBP 36,393.45 to Clear Junction Limited (“Clear Junction“), a provider of payment services. This penalty follows (and is associated with) OFSI’s earlier GBP 50,000 penalty against TransferGo, announced in August 2021 (see our previous blog post here).
The monetary penalty related to 15 transactions made to accounts held by non-sanctioned parties with the Russian National Commercial Bank (“RNCB”), a Designated Party, with a total value of GBP 7,703.68. These payments had been initiated by TransferGo and were the subject of the previously announced penalty.
Clear Junction made a voluntary disclosure of 8 transactions to OFSI, and following its investigation OFSI found a further 8 transactions that were not disclosed (including 5 of which were made after Clear Junction submitted its report to OFSI). OFSI refrained from imposing a penalty in respect of one of the transactions, as this was found to be the result of a technical issue with Clear Junction’s compliance system, which had been resolved. As Clear Junction had voluntarily disclosed some, but not all, of the payments, OFSI granted a partial reduction for voluntary disclosure of 26.7% (less than the maximum 50% discount that would have been available had all of the payments been disclosed).
Clear Junction exercised its right to have the penalty reviewed under s.147 of the Policing and Crime Act 2017, following which the Economic Secretary to the Treasury decided that the penalty and the amount should be upheld.
This case underlines the UK position that payments to a bank account held at a sanctioned bank may give rise to exposure under the designated party controls – and therefore, that it is vital to screen not only your counterparties, but also the banks involved in the payment chain. It also underlines the need for disclosures to be full and frank in order to receive maximum credit for disclosure.
To read the full decision, click here.