The UK Industry and Economic Security Minister, Nusrat Ghani, has today announced the creation of a new government unit to “crack down” on companies evading sanctions; the Office of Trade Sanctions Implementation (OTSI).
The OTSI will launch in early 2024 once the new legal requirements are in place and will operate alongside the existing work the government is doing to ensure UK trade sanctions are adhered to.
The unit will be responsible for civil enforcement of trade sanctions, including those against Russia, and is intended to provide a new tool to curb activities by companies which are avoiding sanctions by sending products to Russia via third party nations. The OTSI will help businesses comply with sanctions, investigate potential breaches, issue civil penalties and refer cases to HMRC for criminal enforcement, where necessary.
The new unit will further bolster the UK’s toolkit to combat global sanction evasion and imposes tougher penalties on those who flout global rules. The news comes as the government is expected to announce a fresh set of Russian sanctions in the coming days.
We will post further updates as details emerge. For now, key questions that come to mind are:
- What will the maximum penalties be, and will there be guidance on calculating penalties?
- What credit will attach to voluntary disclosures?
- Will investigations and penalties remain confidential, as they currently are for compounding penalties imposed by HMRC, or will there be publicity as we see with OFSI for financial sanctions penalties (for example, related to breaches of the asset freezes)?
- What will the demarcation of responsibilities be between HMRC and OTSI? Will HMRC retain the power to investigate and penalise trade sanctions breaches? Will OTSI have powers related to standard export control offences?
The full government press release can be viewed here.
