The Solicitors Regulation Authority (SRA) has highlighted the significance of voluntary disclosures concerning breaches of Russia sanctions, following the implementation of a financial penalty for such offences.
The Office of Financial Sanctions Implementation (OFSI) issued a fine of £15,000 to Integral Concierge Services Ltd (ICSL), a company predominantly catering to Russian and Ukrainian nationals. The penalty was imposed for providing property management services to an individual designated under the Russia sanctions regime. These services, offered since 2015, included rent collection, maintenance, and insurance arrangements, amounting to a value of £15,500 once the client was designated.
ICSL engaged in several financial transactions using the client’s accounts without acquiring the necessary licence from OFSI. It has been noted by the regulatory body that the possibility of granting a licence could have been considered if ICSL had submitted an application.
A significant aspect of this case, as emphasised by the SRA, concerns OFSI’s approach towards voluntary disclosure. It is noted that ICSL failed to voluntarily report the sanctions breaches to OFSI. OFSI underscores the weight it places on voluntary disclosures, elucidating that entities coming forward proactively could benefit from a reduction of up to 50% in financial penalties.
OFSI pointed out that five out of ten monetary penalties related to sanctions did not involve voluntary disclosures. In its statement, OFSI revealed that ICSL either had knowledge of, or reasonable cause to suspect, its breach of sanctions. During the investigation, ICSL confessed to an inadequate understanding of the sanctions regime, acknowledging its lax attitude towards seeking necessary guidance.
OFSI also criticised ICSL’s actions for mitigating the intended disruptions to the designated person, undermining the sanctions’ aim of pressuring Russia to cease its unlawful activities in Ukraine. Despite this, ICSL cooperated with the investigation by providing information on previously undisclosed breaches.
This case serves as a critical reminder of the importance of compliance and transparency within the sanctions framework, reinforcing the potential benefits of voluntary disclosure.
