The UK government has announced the creation of the Office of Trade Sanctions Implementation (OTSI) to further crack down on those dodging UK trade sanctions. OTSI will be responsible for the civil enforcement of trade sanctions. The new unit is expected to launch in early 2024, once a new legal framework for OTSI is in place.
While we expect the full suite of its enforcement tools to be laid out in new legislation, the government has made clear that OTSI will have powers to investigate and levy monetary penalties against trade sanctions breaches. It will refer cases requiring criminal enforcement to HM Revenue & Customs (HMRC). OTSI will sit within the Department for Business and Trade and work alongside existing sanctions enforcement bodies, like the Office of Financial Sanctions Implementation (OFSI).
Presently, breaches of trade sanctions are investigated and enforced by HMRC. HMRC has the power to issue fines under its compound penalty regime or to refer matters for criminal prosecution to the Crown Prosecution Service.
The announcement on OTSI’s creation is the latest example of an increased focus from the UK government to ensure the effectiveness its trade sanctions regime, particularly as it relates to Russian aggression against Ukraine. On 6 December 2023, OFSI, the National Crime Agency, and the Foreign Commonwealth & Development Office issued a Red Alert to UK businesses on common evasion techniques for the export of high-risk goods being used by Russia on the battlefield in Ukraine. The same day, the UK government announced a package of 46 new sanctions targeting individuals and entities supplying and funding Russia’s war efforts, including persons exporting equipment and parts to Russia.
Edie Essex Barrett, London Trainee Solicitor, contributed to the drafting of this alert.
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