OFSI imposes first monetary penalty for sanctions breach

Raphaels Bank was fined £5,000 after handling £200 worth of funds belonging to an Egyptian financial sanctions target, according to a notice published by the OFSI.

Financial sanctions expert Stacy Keen of Pinsent Masons, the law firm behind Out-Law.com, said that although the fine appeared "relatively modest, particularly when compared to the fines imposed against financial institutions by the US authorities for sanctions breaches, it does represent 2,500% of the value of the transaction to which the breach relates".

"A fine of 5,000% of the value of the relevant transaction would have been imposed were it not for Raphaels Bank following OFSI's published guidance on case assessment, in particular Raphaels Bank's disclosure and cooperation," she said. "The availability of a 50% reduction in the value of a penalty imposed demonstrates the importance of self-reporting and cooperation."

The 2017 Policing and Crime Act introduced civil penalties for breaches of financial sanctions, available in cases where it is not in the public interest to prosecute. OFSI, which is part of the UK Treasury, can impose a fine if it is satisfied that a breach has been committed and the individual or organisation involved "knew, or had reasonable cause to suspect" that their actions were in breach of sanctions. The maximum penalty is the greater of £1 million and 50% of the estimated value of the funds that were the subject of the breach.

In its published notice, OFSI said that it had been minded to impose a £10,000 penalty in this case. However, the penalty was reduced "in consideration of Raphaels Bank's disclosure and cooperation", particularly the fact that it had self-reported once it became aware that a breach had taken place. The proceeds of the fine will be paid into the UK consolidated fund.

OFSI has opted to publish only a short summary of the breach, as "enquiries remain ongoing into other aspects of this breach which do not concern Raphaels Bank". It may publish a fuller summary once these enquiries have concluded, it said.