Monetary penalties for financial sanctions breaches

The Policing and Crime Act 2017 (‘the 2017 Act’) creates powers for HM Treasury to impose monetary penalties for breaches of financial sanctions.

The Sanctions and Anti Money Laundering Act (2018)(“SAMLA”) amended the 2017 Act. Those amendments ensured the majority of provisions in regulations made under SAMLA fall within the 2017 Act definition of ‘Financial sanctions legislation’, which in turn ensures that where there has been a breach of those provisions a penalty under the 2017 Act can be applied.

The Office of Financial Sanctions Implementation (OFSI) is the part of the Treasury that applies these powers. This guidance sets out what the powers are, how OFSI will use them, and a person’s rights if it imposes a monetary penalty on them.

We have issued this guidance in line with s.149 (1) of the 2017 Act, which states: The Treasury must issue guidance as to-

(a) the circumstances in which it may consider it appropriate to impose a monetary penalty under section 146 or 148, and
(b) how it will determine the amount of the penalty.

In this guidance OFSI sets out:

• an explanation of the powers given to the Treasury in the 2017 Act
• a summary of our compliance and enforcement approach
• an overview of how we will assess whether to apply a monetary penalty, and what
we will take into account
• an overview of the process that will decide the level of penalty
• an explanation of how we will impose a penalty, including timescales at each stage and rights of review and appeal

From time to time OFSI will review this guidance in response to feedback and as we learn from using these powers. The guidance applies from 28 January 2022 – it replaces guidance for all cases where OFSI becomes aware of a potential breach after 28 January 2022.