On 21 January 2019, the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, issued a £5,000 fine against R. Raphael Bank & Sons plc, trading as Raphaels Bank, for dealing with £200 belonging to an unidentified designated person in violation of EU sanctions against Egypt (implemented in the UK under the Egypt (Asset-Freezing) Regulations 2011).
This is the first civil monetary penalty imposed by OFSI using its new powers under Part 8 of the Policing and Crime Act 2017 (PCA 2017). It is also the first indication that OFSI intends to deliver on the statement in its 2017-18 Annual Review that: “[I]t is likely that OFSI will impose monetary penalties in 2018-19”. OFSI is continuing to make enquiries regarding other aspects of the violation that do not involve Raphaels Bank.
OFSI’s Penalty Notice confirms that OFSI “imposed the monetary penalty because it was satisfied on balance of probabilities, that Raphaels Bank breached a prohibition that is imposed by or under financial sanctions legislations, and knew, or had reasonable cause to suspect, that they were in breach of the prohibition”.
The maximum fine for sanctions violations provided for under the PCA 2017 is £1 million or 50 percent of the estimate value of the funds to which the breach relates, whichever is higher. In following its Guidance, OFSI determined that Rapheals Bank’s voluntary disclosure and subsequent cooperation warranted a 50% reduction from the baseline penalty level of £10,000.
This indicates that, despite the small amount involved, OFSI determined the breach to be ‘serious’ (as opposed to ‘most serious’ for which voluntary disclosure will only lead to a reduction of up to 30%). It also confirms that, whilst voluntary disclosure will not necessarily preclude the imposition of a monetary penalty, doing so will likely reduce the level of any penalty imposed.