OFSI annual review 2020/2021

• United Kingdom

• Fraud and financial crime
• Sanctions

21-10-2021

On 14 October 2021, the Office of Financial Sanctions Implementation (“OFSI”) published its Annual Review, providing an overview of OFSI’s activities in the financial year April 2020 to March 2021. A copy of the Review is available here.

What does the annual review show?

The Review highlights that  2020/2021 was one of the busiest and more challenging years for OFSI, primarily due to:  

• a large increase in designations (notably a 224% increase in designations between January – March 2021 when compared with the same period last year)
• the implementation of the Sanctions and Anti-Money Laundering Act 2018 (“Sanctions Act”) following the UK’s exit from the EU on 31 December 2020 and the subsequent transition to the new autonomous UK sanctions framework
• adjustments required as a result of the COVID-19 pandemic; and
• new licensing grounds and adjustments to existing licensing grounds under the new UK framework 

What has OFSI done?

The report discusses the various changes and developments OFSI has made throughout the course of 2020 to 2021. Key points include:

• OFSI considered 132 reports of potential sanctions breaches.  This represents a slight decrease on the previous year (140 reports), with historic suspected breaches pursuant to the Iran (nuclear proliferation) programme accounting for a significant proportion of these
• in addition, OFSI reports a notable change in the demographic from which reports have been received.  Whilst the majority of reports remain from the financial services sector, an increase in reports from charity, legal, insurance, real estate, telecommunications and travel sectors was identified
• there has been an increase in referrals from international governmental and regulatory bodies
• OFSI reports that suspected breach reports pursuant to legislation issued under the Sanctions Act has been received during this year, specifically in relation to suspected breaches of the UK’s autonomous Global Human Rights sanctions regime
• webinars and blogs and attendance at roundtables and smaller industry events to enable continued engagement in respect of sanctions
• engaging with bodies and regulators in 99 jurisdictions and expanding the network in Asia and the Pacific
• attendance at 45 industry events
• publication of specific guidance, namely for the maritime sector, updated penalty guidance and guidance in relation to the Libya regime having acknowledged the complexities of this specific regime
• 1950 changes to the consolidated list throughout the year
• a small increase of 7.5% in licenses issued, with 43 new specific licenses and 2 general licenses; and
• 75 license amendments were made.  Interestingly, 64 of these related to the Libya regime (an increase of 52% on the previous year) demonstrating OFSI’s focus on this particular regime and its effort to consolidate licenses where appropriate

Looking ahead

Moving forward OFSI plans to consolidate the work undertaken so far and “ensure UK autonomous sanctions are thoroughly understood, implemented and enforced to support the UK’s targeted and strategic work to fight illicit financial activity”.

The main message from the report is that OFSI anticipates continuing to work heavily to engage with organisations in key sectors to raise awareness and to educate on sanctions compliance.  Continued engagement with OFSI is also encouraged.