More than 100 UK companies have admitted to breaching British sanctions against Russia since the country’s invasion of Ukraine last year, according to official data. A freedom of information request submitted to HM Treasury and seen by the Financial Times revealed that 127 companies had voluntarily disclosed their violations as of May 17. By admitting breaches and cooperating with investigations, businesses can reduce government penalties.
Since Russia’s invasion of Ukraine in February 2022, the UK has imposed its most severe package of sanctions against a major economy. These measures include a moratorium on UK entities dealing with over two dozen banks and more than 100 oligarchs. The UK has placed more than 1,600 individuals and companies under sanctions in response to the war.
Stacy Keen, a financial crime partner at law firm Pinsent Masons, which made the FOI request, highlighted the unique challenges faced by British businesses in dealing with Russia. She noted that Russia’s integration into the global economy had created a bigger test compared to other regimes under sanctions, such as Iran and North Korea. Russian individuals and entities have a significant presence outside of their home country, unlike the Iranian or Syrian regimes, which makes the impact of sanctions felt more keenly.
To ensure leniency, Keen advised businesses to consider admitting breaches. Sanctions penalties can range from no action or a warning letter to civil penalties or criminal prosecution, with no cap on financial penalties. The Office of Financial Sanctions Implementation, part of HM Treasury, monitors breaches. A source close to the OFSI emphasized that the unit is not seeking to unduly penalize honest mistakes and takes into account efforts made to prevent breaches when assessing the severity of a violation.
UK companies face challenges in ensuring compliance with sanctions, particularly in relation to transparency surrounding company ownership and control. This issue is further complicated by the involvement of Russian shareholders through shell companies. The complexities of these links make it harder for UK companies to ensure they have not breached sanctions.
The extent of the economic ties between the UK and Russia was demonstrated last year when Chelsea Football Club faced a crisis following the UK’s announcement of sanctions against its owner, Russian oligarch Roman Abramovich. The sanctions temporarily halted the sale of the Premier League team and put its sponsorship deals in jeopardy.
The impact of Western sanctions on Russia has been substantial, with $300 billion belonging to Russia’s central bank frozen since the invasion of Ukraine. In a recent development, EU leaders endorsed plans to use billions of euros in earnings generated by frozen Russian assets to support Ukraine. The European Commission is expected to propose legal measures in early December.
More detail via The News International here… ( Image via The News International )
