OFSI disclosure notice highlights need to keep public contact details up to date and respond to ‘RFIs’

Rebecca Devaney of Pinsent Masons was commenting following the OFSI notice for a breach of regulation 36(6) of the Counter Terrorism (International Sanctions) (EU Exit) Regulations 2019 (43 pages/1.2 MB). The disclosure notice relates to an information offence of failing to respond to requests for information (RFIs) without reasonable excuse by three UK registered charities.

Devaney said: “While the disclosure notice is focused on the charity sector, businesses across all sectors should ensure they keep public contact details, be it on a public register or otherwise, up to date and monitor and respond to incoming correspondence accordingly. A failure to respond to a RFI from OFSI runs the risk of inadvertently committing an offence under sanctions regulations.”

The three charities in this case were all UK registered, regulated by the Charity Commission and were listed on the Charity Commission public register, which indicates that they were still active. UK registered charities are required to comply with the law, including UK sanctions. OFSI has powers to request information under sanctions regulations and it is an offence not to comply with a requirement to provide information or an OFSI request for information.

OFSI emailed a letter which included an RFI to the charities using the email addresses listed in the public register. When no response was received in the stated time period, OFSI sent a second letter to the charities by post and email, using the email addresses and postal addresses listed in the public register. A third letter was then sent following further failure to respond noting a lack of response within the updated timeframe and expressing an intention to publish the disclosure notice. A deadline for making representations relating to the third letter was given. Again, OFSI did not receive a response.

OFSI did not assess the failure to provide the required information, as required under sanctions legislation, as sufficiently serious to impose a monetary penalty. However, OFSI assessed the nature and circumstances of the breach as sufficient to warrant the publication of the disclosure notice. This is the second time that OFSI has published a disclosure notice since obtaining the power to do so in 2017.

OFSI noted in its disclosure it had submitted RFIs to other charities which had complied.

Stacy Keen of Pinsent Masons said “Disclosures are published in cases deemed by OFSI to be of moderate severity, with a warning letter considered to be too lenient, and a monetary penalty disproportionately punitive. OFSI may also deem a disclosure to be a fair and proportionate outcome, for example where there are valuable lessons to be learnt for industry and where it is not in the public interest to issue a monetary penalty.”

“Organisations – not just those operating in the charity sector – should ensure that they stress test their systems and controls against the lessons learned in a disclosure. Similar non-compliance by an organisation following the issue of a disclosure may result in more severe enforcement by OFSI,” she said.

OFSI considered two aggravating factors in reaching its decision to publish the disclosure notice. First, the failure to respond to the RFI despite several communication attempts, and second, the importance of the RFI in monitoring compliance with the regulations, which was hindered. OFSI did not consider the possibility of lack of engagement could have been the result of the charities failing to update their contact information on the register to be a mitigating factor. OFSI did flag that it encountered some charities for which contact information was not up-to-date or incoming correspondence was not regularly monitored. However, all other charities they contacted as part of the RFIs responded with the requested information.

This disclosure notice is OFSI’s first enforcement under a thematic sanctions regime – all previous enforcement has been under geographic sanctions regimes. The disclosure notice highlights that OFSI will enforce against companies in any sector. Devaney said: “This disclosure notice emphasises the need for companies to ensure that their sanctions compliance programme includes procedures to manage the provision of timely responses to OFSI information requests”.