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MPs criticise UK government for weak enforcement of sanctions regime

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Two cross-party groups of MPs have accused the UK government of failing to properly enforce its international sanctions regime, with just 1 per cent of reports of suspected breaches resulting in fines.

Ministers imposed sanctions on more than 1,300 Russian individuals and organisations as a key plank of the UK’s response to this year’s invasion of Ukraine, but the parliamentary groups said the measures risk falling flat because rulebreakers are not being penalised.

Data published by the Office of Financial Sanctions Implementation, the agency responsible for enforcement of financial sanctions, shows that it received at least 729 reports of potential sanctions-busting since April 2017 but handed out only eight fines for breaches in that time.

Only two of the fines exceeded £50,000. The most recent was a £30,000 penalty announced in September against a Sussex-based vineyard that accepted payments and bottles of wine worth almost £4,000 from a company sanctioned after Russia’s 2014 annexation of Crimea.

In a joint statement the two parliamentary groups said the “persistently low levels of enforcement” left the government open to the accusation that “it has put more emphasis on being seen to act than actually delivering”.

The enforcement record was “not good enough”, added Simon Fell, Conservative MP and incoming co-chair of the all-party parliamentary group on Fair Business Banking. “The government has done a lot to increase the number of people and companies subject to sanctions, but without effectively policing those sanctions, what does this amount to? Not very much.”

Dame Margaret Hodge, Labour MP and chair of the all-party parliamentary group on Anti-Corruption and Responsible Tax, said: “These figures clearly show we are not putting enough resource into this area of enforcement,” adding: “While we accept that some reports of potential sanctions breaches may be misguided it seems very, very unlikely that nearly 99 per cent of such reports are plain wrong.”

The parliamentary groups, which campaign for tougher economic crime legislation to root out money laundering, include 44 MPs and members of the House of Lords.

Their criticism calls into question the efficacy of OFSI, hailed as a “centre of excellence” when it was set up six years ago by then-chancellor George Osborne to bring the UK’s reputation on sanctions enforcement in line with the US.

The agency, part of the Treasury, oversees sanctions against more than 3,000 entities and individuals linked to countries, including Syria, Libya and Russia.

OFSI has yet to impose any fines for breaches of new sanctions introduced in the wake of Russia’s full-scale invasion of Ukraine in late February though any breach would take time to investigate.

It said last month that it had received 236 of reports of potential sanctions breaches since the war began on February 24, a sharp rise on the 147 for the 12-month period to March 2022.

In its annual review, published in November, OFSI said it expected to have about 100 staff by the end 2022, up from 45 a year earlier. But the MPs said the Treasury had not published OFSI’s budget nor said how many staff were assigned to investigate suspected breaches.

“OFSI continues to take every suspected breach of UK sanctions extremely seriously and acts to ensure compliance with our regime,” the Treasury said.

It said its response to breaches was proportionate and that “in the vast majority of cases we take administrative action, issuing warnings and helping companies to understand compliance rules better.” It refused to say how many warnings it had issued.

“Those found in serious breach of UK sanctions regulations face monetary penalties or up to seven years in prison,” it added.

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