OFSI shows willingness to impose strict liability Russia sanctions penalty

It follows a penalty imposed on Integral Concierge Services Limited (ICSL), a small property management and concierge company, for violating the financial sanctions regimewhich targeted individuals and entities in response to Russia’s illegal invasion of Ukraine in 2022. ICSL predominantly provided services primarily to Russian and Ukrainian nationals.

The fine highlights “key lessons” for industry, particularly firms within the property management sector, the UK government said. 

The UK’s Russian sanctions regime was ramped up as part of a broader international effort to respond to Russia’s actions. The measures aim to exert economic pressure on Russia by restricting access to financial resources and services that could support its military activities. 

In this case the monetary penalty relates to the property management service ICSL provided to a person subject to an asset freeze by the UK government. Between 2022 and 2023, ICSL made or received 26 payments, with a cumulative value of £15,487.30, in connection with the services they were providing to the asset freeze target, an owner of residential property in the UK. ICSL had provided property services to the asset freeze target since 2015, including the collection of rent from tenants, as well as organising and paying for routine maintenance, repairs and insurance. These services continued in respect of the property after the person was designated. 

The penalty for 10 of the 26 payments was imposed on the basis that on the balance of probabilities ICSL breachedfinancial sanctions restrictions and either knew or had reasonable cause to suspect that it was in breach of those prohibitions. 

The penalty for the remaining 16 payments was imposed on a strict liability basis based on OFSI’s conclusion that on the balance of probabilities, ICSL breached prohibitions imposed by financial sanctions legislation.

Issuing a civil penalty on a strict liability basis is possible following a change in the law providing that, for breaches of financial sanctions committed after 15 June 2022, OFSI can impose a civil monetary penalty without needing to prove that a person had knowledge or reasonable cause to suspect that they were in breach of financial sanctions. 

As a result of these breaches, ICSL was given a penalty of £15,000. ICSL did not challenge the penalty and paid in full.