Today, the Department for Business and Trade launches the Office of Trade Sanctions Implementation. OTSI is a new unit equipped with enhanced powers to strengthen the implementation and enforcement of trade sanctions. Following Russia’s full-scale invasion of Ukraine, the UK imposed sanctions against Russia on an unprecedented scale. These sanctions have deprived Russia of more than $400 billion since February 2022. On one estimate, that is equivalent to four more years of funding for the invasion. The creation of OTSI will help ensure that the UK’s trade sanctions regimes have maximum impact.
The Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024, which come into force on 10 October 2024, grant OTSI new civil enforcement powers, which complement His Majesty’s Revenue and Customs’ existing powers to enforce trade sanctions. While HMRC continues to be responsible for enforcement in relation to goods and technology that cross the UK border, OTSI will lead on the enforcement of:
the provision or procurement of sanctioned services;
moving, making available, or acquiring sanctioned goods outside the UK (where a UK person is involved);
transferring, making available or acquiring sanctioned technology outside the UK (where a UK person is involved);
providing ancillary services to the movement, making available or acquisition of sanctioned goods outside the UK (where a UK person is involved); and
providing ancillary services to the transfer, making available or acquisition of sanctioned technology outside the UK (where a UK person is involved).
The Office of Financial Sanctions Implementation in HM Treasury remains responsible for enforcement of the oil price cap, alongside its implementation of financial sanctions.
With this new enforcement toolkit, OTSI can impose civil monetary penalties and has powers to request, share, and publish information about sanctions breaches. There are also new reporting obligations for financial services, money services businesses and legal service providers. These will help OTSI to detect and investigate suspected breaches.
A key part of ensuring UK sanctions are effective is improving compliance. As well as tackling breaches when they occur, OTSI is being established to help UK businesses comply with their obligations under UK trade sanctions, through engagement with industry and by providing information and guidance. OTSI will also deliver the sanctions licensing function for stand-alone services, including professional and business services.
The Department for Transport will lead on civil enforcement in relation to aircraft and shipping sanctions. The Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 also confer powers on the Secretary of State for Transport to request and share information, impose a civil monetary penalty, and to publish information about a breach of aircraft or shipping sanctions where a penalty has, or could have been, imposed. The legislation also places obligations on certain persons to report known or suspected breaches to DFT.
The UK’s sanctions framework was severely tested by the unprecedented scale and scope of the sanctions we have imposed on Russia since 2022. This step change in how we use sanctions revealed areas which required further strengthening, including the need for civil enforcement powers for certain trade sanctions breaches. This Government are committed to maximising the effectiveness of UK sanctions, including through significantly strengthening our sanctions enforcement tools. Launching OTSI and equipping it, and DFT, with an enhanced enforcement toolkit demonstrates that commitment.
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