In its 2019-2020 Annual Report (the Report), the UK’s sanctions office (the UK Office of Financial Sanctions Implementation (OFSI)) revealed that, between April 2019 and March 2020, it had received 140 voluntary disclosures of potential sanctions violations related to transactions worth a total of £982 million.  This represents a record number of reports, and an increase from the 99 reports concerning payments worth just over £262 million it received in the same period between 2018 and 2019.

According to the Report, the majority of the voluntary disclosures are being made by the banking and financial sectors, although reports are also being made by those in the legal, charity, insurance and travel sectors.  It is not clear from the Report whether the disclosures concern potential violations by the reporting company or whether they relate to potential violations by third parties.

OFSI’s Report also reveals that the agency has received more reports relating to potential breaches of sanctions in place against Libya, as compared to any other regime.  This is perhaps not surprising.  A 2019 parliamentary report revealed that the UK holds over £12 billion in blocked assets tied to former Libyan leader Muammar Gaddafi and his former associates.

Outside of the enforcement arena, the Report also sets out OFSI’s stall as to post- BREXIT arrangements including its engagement with international agencies, and the issuing of licences.

With the imminent end of the Brexit transition period and with the UK Foreign, Commonwealth and Development Office’s Sanctions Unit spreading its own message as to how UK sanctions policy and compliance will operate from 2021, could 2021 be the new dawn for OFSI with the further flexing of its enforcement muscles?

Who are OFSI?

OFSI was established in March 2016 and is part of Her Majesty’s Treasury (HMT).  Its role is to assist HMT in ensuring that financial sanctions are properly understood, implemented and enforced in the United Kingdom.  In April 2017, the agency gained significant new powers to impose civil monetary penalties under the Policing and Crime Act 2017 (PACA) for financial sanctions violations.  Under PACA, OFSI can impose civil monetary penalties for financial sanctions violations, of up to the greater of £1 million or 50% of the funds or assets involved, employing the lower civil standard of proof (namely, on the balance of probabilities) rather than the higher criminal standard (of beyond reasonable doubt).

Despite the new powers under PACA, OFSI has, until 2020, kept a low profile as compared to other regulators.  It has imposed only four penalties in its entire history; three of which hardly deserve a footnote in the annals of financial sanction enforcement fines.  In January 2019, OFSI imposed its first penalty of £5,000, followed by a penalty of £10,000 in March 2019 and then, in September 2019, a penalty of £146,341.  Its fourth penalty, against Standard Chartered Bank, was its first multi-million pound penalty and arguably a sign that those who write off OFSI as a regulator, may live to regret it.

On 31 March 2020, OFSI announced that it had imposed a £20.47 million fine on Standard Chartered Bank (a UK headquartered bank) for breaching sectoral sanctions imposed against Russia by the EU (which, at that time, included the UK).  The penalty was imposed following a voluntary report to OFSI by the bank in which it disclosed that it had lent approximately £266 million to the Turkish bank Denizbank A.Ş., at a time when Denizbank was majority owned by the Russian bank Sberbank and therefore subject to the sectoral sanctions.  According to OFSI, Standard Chartered Bank’s conduct represented a “most serious” breach of financial sanctions, although credit was given for Standard Chartered Bank’s investigative report as well as the fact that the bank did not willfully breach the sanctions regime, had acted in good faith, had intended to comply with the relevant restrictions, had fully co-operated with OFSI and had taken remedial steps following the breach.

OFSI is sharpening its teeth

Against the background of the Standard Chartered penalty, the Report is further evidence that OFSI is committed to establishing itself as a financial regulator with teeth.

The Report highlights that:

  1. Since its establishment less than five years’ ago, OFSI has achieved a number of milestones. Most notably, the number of voluntary disclosures made to it during the past year suggest that it is not just OFSI itself that views itself as integral to the UK government’s strategy to fight financial crime.  Participants in the UK also see the importance of OFSI in that fight.
  2. As detailed in our client alert “The UK’s Post-Transition Period Sanctions Regime – Continuity or Change?”, the end of the Brexit transition period does not signal an end of the UK’s engagement with financial sanctions compliance. The UK government remains committed to its autonomous financial sanctions regimes, and to ensuring that they are properly understood and enforced.
  3. Arguably the buzzword of almost every UK law enforcement agency too, the Report highlights OFSI’s current – and projected – “cooperation” with international agencies. The Report notes that, in the past year, OFSI has undertaken engagements in 83 countries across 6 continents, which is close to double the number of jurisdictions with which it engaged in the preceding year.  The focus of OFSI’s multilateral and international engagements was on “sanctions related to counter-terrorism and counter-proliferation”.  Co-operation doubtless brings OFSI increased resources, intelligence and zeal.
  4. Although outside the enforcement world, OFSI professes to have implemented measures to consolidate the licencing process and ensure that licences can be issued as fast as possible. At the end of the transition period, OFSI will also have the ability to issue “general licences” which, if granted, will permit the holder to undertake specific types of behaviour (typically, after notifying OFSI in advance) without the need for an application process.


Although it remains to be seen how robust OFSI’s sanctions enforcement will be, it is clear that the UK’s financial sanctions landscape continues to evolve and, as a result, OFSI’s importance is growing in stature and influence.  It should remain on the top of compliance agendas with a close eye focused on developments.

In what some are calling potentially “radical and seismic changes,” on 3 November 2020, the UK government announced that it had finished a three-year examination of the case for reform of the UK’s corporate criminal liability laws and tasked the Law Commission, an independent body designed to recommend legal reforms, to conduct further analysis and make recommendations for improvement. The Law Commission has said that it aims to publish its recommendations in late 2021.

With some limited exceptions (most notably, the section 7 offence under the UK Bribery Act 2010 and the facilitation of tax evasion offences under the UK Criminal Finances Act 2017), corporate criminal liability in the UK is based on the “identification principle.” This principle provides that a company can only be held criminally liable for financial crime offences if prosecutors can prove beyond reasonable doubt that the “directing mind and will” of the company committed or was aware of the misconduct.

Continue Reading The UK (Slowly) Inches Toward Corporate Criminal Liability Reform

In a recent roundtable as part of the World Bank Office of Suspension and Debarment’s Fifth International Debarment Colloquium, panelist Joseph Mauro (an Integrity Compliance Specialist with the Bank’s Integrity Vice Presidency (INT)) discussed efforts to move from a “stick” to a “carrot” approach with respect to corporate compliance programs.

Under the Bank’s current system, while implementation of a compliance program is a remedial measure for which mitigating credit may apply, individuals within the Integrity Compliance Office were rarely involved in reviewing a compliance program to any significant extent until after a company has already been sanctioned. Under this process, a company’s compliance program was typically reviewed in-depth only as a condition for release from sanction.

Continue Reading World Bank Purports to Move From “Stick” to “Carrot” Approach on Compliance

The US Department of Education issued a highly anticipated report concluding that US colleges and universities have failed to disclose billions of dollars in foreign funding, as required by federal law.[1] The report provides greater detail on the Department’s ongoing probe of foreign influence in US higher education and highlights new compliance risks faced by colleges and universities.
Continue Reading Department of Education Report Highlights the Compliance Risks of Unreported Foreign Funding for US Colleges and Universities

On 21 October 2020, Her Majesty’s Revenue and Customs (HMRC) – the UK’s tax authority – released updated figures regarding the number of investigations that it has open into potential offences under Part 3 of the Criminal Finances Act 2017 (the Act). Part 3 of the Act makes it a criminal offence for businesses to fail to put in place reasonable procedures to prevent their employees and associated persons – i.e. those who act for or on behalf of them – from criminally facilitating tax evasion.

According to the information released by HMRC, as at 13 October 2020, HMRC had 13 investigations into potential offences under the Act and a further 18 cases currently under review. HMRC also report that its investigations span 10 different business sectors, including financial services, oils, construction, labour provision and software development, and that those investigations span all HMRC customer groups from small business through to some of the UK’s largest businesses.

The number and range of investigations appear to show that HMRC is actively enforcing the Act across businesses of all shapes and sizes, even despite the pressures on workload and resources caused by the COVID-19 pandemic. This reach, together with potentially unlimited fines for businesses found guilty of the offences, is a salutary reminder that businesses must take their responsibilities seriously and put in place reasonable procedures to stop the facilitation of tax evasion.

Continue Reading The Future of the Facilitation of Tax Evasion Offences in the UK

Following a recent rise, the price of Bitcoin once again exceeds $10,000, a key resistance level which, if sustained, could see it rising even further. Interest in cryptocurrencies is, according to some observers, likely to rise as measures taken by Central Banks to combat the effects of the coronavirus pandemic result in the devaluing of their own fiat currencies, and while Central Banks themselves experiment with digital currencies. The Libra Association continues to work on Libra, a token designed to be used on Facebook. Rumors swirl of imminent support by the global payments giant PayPal for cryptocurrencies, supported by recent job listings for cryptocurrency engineers. Whilst it might not yet have returned to the levels of mania seen during 2017-2018, cryptocurrency appears likely to continue to grow in both maturity and usage. Such a rise will inevitably be marked with a corresponding increase in the debate over the extent of regulation needed in the area. Should it be a case of caveat emptor or should government regulators take greater steps to introduce guard rails in this area?

Continue Reading Sheriffs of the Wild West? Regulators will Likely Continue Debating the Necessity of Greater Cryptoasset Regulation

The US Department of Homeland Security’s Customs and Border Protection agency (CBP) announced on September 14 the issuance of five new withhold release orders (WROs) on entities allegedly using forced labor in or from China’s western Xinjiang Uyghur Autonomous Region (XUAR). The WROs bar the import into the United States of various goods alleged to be produced by forced, indentured, and convict labor (“Forced Labor”), including cotton, apparel, hair, and technology products.

CBP’s announcement is just the latest in a wider US government interagency effort to crack down on alleged human rights abuses related to ethnic minorities in XUAR. Companies are encouraged to take a fresh look at how their existing compliance programs address the risks of Forced Labor and related labor and human rights issues in their supply chains, as well as related economic sanctions and export controls risks.

For more information, click here to read the full client alert.

The DC Circuit issued an opinion in late August that could significantly disrupt decades of Congressional investigations practice. In Comm. on the Judiciary of United States House of Representatives v. McGahn, No. 19-5331, 2020 WL 5104869 (D.C. Cir. Aug. 31, 2020), the DC Circuit effectively put an end to the US House Judiciary Committee’s attempt to enforce judicially a subpoena against former White House Counsel Donald McGahn. Pending rehearing en banc and/or appeal,[1] the decision could eliminate the force and effect of subpoena authority—the authority underlying every House investigation.

For more information, click here to read the full client alert.

[1] House Democratic leaders have vowed to seek a rehearing en banc.


The Trump administration is considering a ban on US imports of Xinjiang-origin cotton and other products due to allegations of widespread forced labor. The scope of the possible restrictions has not been made public but credible reporting suggests that it could include cotton and tomato products from the Xinjiang Uyghur Autonomous Region (XUAR) or wider prohibitions covering cotton products from across China and third-countries relying on XUAR-sourced materials or labor.

XUAR produces an estimated 20% of the world’s cotton and 85% of China’s cotton. The far western province is also the site of alleged human rights violations, including the detention and internment of ethnic Uyghur and Turkic Muslim minorities, surveillance of local populations, and use of forced and prison labor from the XUAR.

A ban on Xinjiang-sourced cotton products could radically impact global supply chains and the apparel industry, and further escalate the US-China trade war. The Trump Administration has aggressively employed sanctions and export controls against Chinese officials and entities. This advisory discusses Customs and Border Protection’s processes for implementing and enforcing such an import ban, as well as related investigative and enforcement risks under customs, sanctions, export control, and other laws and regulations

For more information on this issue, click here to read the full Client Alert.

The Department of Justice Antitrust Division’s investigation into price-fixing by generic drug companies continues to remain one of the Antitrust Division’s most active matters. This week the Antitrust Division announced that it had indicted Teva Pharmaceuticals USA Inc. (Teva), the seventh company to reach a resolution with the Antitrust Division in this investigation. Teva is one of the largest pharmaceutical companies in the world.

Teva Pharmaceuticals was charged for its role in three separate conspiracies to fix prices for generic drugs. Specifically, it alleges that Teva, in three separate conspiracies, engaged in the sharing with competitors of pricing information for certain generic drugs in advance of price increase announcements. The first alleged conspiracy involved pravastatin, which is a cholesterol medicine, and other generic drugs; the second alleged conspiracy involved drugs used to treat and manage arthritis, seizures, pain, skin conditions, and blood clots; and the third alleged conspiracy involved drugs used to treat brain cancer, cystic fibrosis, arthritis, and hypertension. The Antitrust Division alleges that the conspiracies lasted for a little over two years and began as early as May 2013 and lasted until around December 2015. The estimated amount of gain/loss for each conspiracy is $200 million, $75 million, and $75 million, respectively.

Continue Reading Another Generic Drug Company Accepts a Criminal Indictment Alleging Collusion