The government is to clampdown on UK companies breaching sanctions with the launch of a new unit.
The Office of Trade Sanctions Implementation (OTSI) will be tasked with helping companies confirm with sanctions and penalise those who do not.
It will be able to levy fines of up to £1m as well as publicly shame companies involved. It will enforce sanctions in cases where UK nationals and businesses are not physically based in the UK.
Following Russia’s invasion of Ukraine, the UK imposed its toughest and most comprehensive sanctions against a major economy, with over £20bn worth of trade with Russia now sanctioned.
The new Office of Trade Sanctions Implementation (OTSI) will work with industry to make complying with sanctions obligations as straightforward as possible by issuing guidance.
The new unit is part of the Department for Business and Trade. OTSI will offer companies guidance, issue licences and investigate reports of trade sanctions breaches.
The move comes as bankers, lawyers and other professionals face new reporting rules which mean they will now be expected to inform officials of suspected breaches of trade sanctions.
HM Revenue and Customs (HMRC) will remain responsible for the enforcement of trade sanctions on goods that cross UK borders as part of its customs role, OTSI now has lead enforcement responsibility for sanctioned services leaving the UK, as well as trade in sanctioned goods and services anywhere else in the world where a UK business or person is involved.
The HMRC team have faced criticism for failing to keep up with the vast increase in its workload, with capacity constraints compromising its efforts.
Chloe Cina, international sanctions expert and Royal United Services Institute (RUSI) fellow said: “Investing in a new specialist unit to issue guidance, grant licences, and enforce certain trade sanctions across 21 UK regimes is compelling evidence that the novel measures introduced as part of the UK’s response to Russia’s invasion of Ukraine are here to stay.
“The industry will be reassured to see that the most complex restrictions relating to professional services will now be dealt with by OTSI directly from today”.
Jonathan Reynolds Business and Trade Secretary said: “Sanctions are vital in defunding Putin’s illegal war and only by working hand in hand with business can we make them as effective as possible.
“This new unit will help ensure businesses comply with trade sanctions and take decisive enforcement action where needed so that, together with business, we can continue to exert maximum pressure on Putin’s regime.”
The global sanctions response to Russia’s invasion of Ukraine has been unprecedented. The UK moved swiftly to impose sweeping sanctions on Russia by targeting the patronage networks that prop up President Putin’s regime as well as strategic sectors key for resourcing Russia’s war.
Nearly 2,000 individuals, many of them wealthy oligarchs, have been designated and their wealth frozen. In the latest move the UK has imposed sanctions on Russian troops deploying chemical weapons on the battlefield in Ukraine, the Foreign Office said.
Igor Kirillov, leader of the Russian military’s radiological, chemical and biological defence troops, the unit itself, and two science centres within Russia’s ministry of defence are among the latest targets to be blacklisted.
