Editor’s Note
This article highlights the release of a new threat assessment report from the UK’s Office of Financial Sanctions Implementation (OFSI). The report focuses on sanctions compliance risks within the property sector and related services, aiming to assist firms in identifying and mitigating vulnerabilities.
The Office of Financial Sanctions Implementation (OFSI) published its property and related services sectors threat assessment report, outlining the threat to sanctions compliance in the property sector and related services (including UK property management firms, and relevant actors across the sector such as estate agents, letting agents, property managers, investors and developers). The report aims to assist property and related services firms with prioritisation as part of a risk-based approach to compliance by providing information on suspected sanctions breaches.
In particular, OFSI notes that since February 2022, just over 1% of all suspected breach reports were reported by property and related services firms. However, 7% of all suspected breaches reported by other firms involved the property sector. The report notes that this discrepancy indicates under-reporting by firms within the sector. OFSI emphasises that it values self-disclosure and timely reporting of suspected breaches; therefore, firms should take care to ensure they consider whether a report needs to be made when they become aware of suspected breaches.
The report also provides some helpful guidance on cross-sector “red flags” indicative of potential sanctions evasion. Property and related services firms are encouraged to review the report alongside its Frequently Asked Questions (FAQs) which provide further guidance and technical information on financial sanctions.
The National Crime Agency (NCA) announced the first criminal convictions it has secured for breaches of the Russia Regulations. Dmitrii Ovsiannikov, a former Russian government minister and his brother, Alexei Ovsiannikov, were found guilty of breaching UK financial sanctions under the Russia (Sanctions) (EU Exit) Regulations (Russia regulations).
Dmitrii Ovsiannikov was sentenced to 40 months’ imprisonment, after being found guilty of knowingly breaching sanctions placed on him and money laundering offences. His brother, Alexei Ovsiannikov, was handed a 15 month suspended sentence, having also found guilty of circumventing sanctions regulations, through making economic resources available to his brother, a designated person.
Stephen Doughty, Foreign, Commonwealth and Development Office sanctions minister said the above. However, while the case illustrates the government’s commitment to enforcement of UK sanctions, the judge’s observations in the judgment raise questions about whether this type of breach warrants prosecution by the Crown Prosecution Service (CPS).
The judge noted that this case was “a country mile from the kinds of structures often seen in international fraud claims,” characterising Dmitrii’s actions as “naïve”, “unsophisticated” and “driven by overoptimism,” with no attempts to conceal his behaviour. Furthermore, Mr Ovsiannikov has successfully challenged his EU designation and challenging his own UK designation at the time the breaches occurred, with the judge accepting that he was likely to succeed. This suggests the breach was technical and unlikely to further the UK’s sanctions regime.
