In response to questions about Russian sanctions enforcement the Latvian authorities have confirmed that they have 14 ongoing criminal prosecutions of which three relate to exports, including circumvention of sanctions by routing exports through China and central Asia, and the others to breaches of financial sanctions.
The Latvian authorities also stated they received 281 suspicious activity reports during 2022 in relation to Russian sanctions, and had received 309 so far in 2023.
The UK’s financial services regulator has today published a report based on its review of sanctions compliance by a sample of 90 regulated firms.
The FCA emphasised the importance it places on compliance with sanctions and the proactive approach it intends to take to enforcement.
The FCA also published examples of what it considers to be good practice and bad practice. The examples of bad practice include:
(i) insufficient information given to management on sanctions risks, and insufficient management attention;
(ii) global sanctions policies that are insufficiently attuned to the specifics of the UK’s regime;
(iii) over-reliance on third-party screening tools without sufficient oversight or attention to the detail and calibration of such tools;
(iv) insufficient contingency planning in advance of anticipated changes to sanctions;
(v) insufficient resources applied to sanctions compliance resulting in significant backlogs; and
(vi) insufficient and inappropriate calibration of of screening tools allowing either too many false positives, or gaps in screening hits.
It was reported today that the Finnish Central Criminal Police are investigating a Finnish company for exports to Russia in breach of the EU’s sanctions.
The investigation was commenced in 2019, with the offences alleged to have taken place between 2016 and 2020.
The exports were of technology destined for use by arms manufacturers in Russia. It is also alleged that the Finnish company was controlled, albeit not owned, by a designated person under the EU’s Russian sanctions.
The UK’s Office of Financial Sanctions Implementation (OFSI) has announced its most recent enforcement action, coupled with changes to its Guidance on its attitude to enforcement.
On 29 June 2022 a new person was added to the UK’s sanctions list as a “Designated Person”. At 4am the next morning a debit card in that Designated Person’s name, but relating to a separate company (albeit one owned or controlled by the Designated Person) was used to withdraw £250. OFSI’s published action relates to Wise Payments Limited (Wise), the regulated financial services firm with which the account was held. While Wise had reacted to the designation of its customer by blocking transfers into or out of the account, its policy was not to stop debit cards on the basis that it often had a lot of false positives with sanctions screening and that it had a duty to its customers as well. The debit card was not blocked until the after the weekend as its sanctions team did not work on the weekend. No further withdrawals were made over this period.
OFSI’s view in its notice is that blocking debit cards while ascertaining if a screening match is genuine is a wholly proportionate policy for managing sanctions risk. Further, not having a sanctions team to review screening hits over the weekend was insufficient.
Thus while the value of the breach was low, and Wise self-reported promptly and co-operated, OFSI applied its “severity” test and determined that Wise’s actions amounted to a moderately severe breach. It was on this basis that OFSI has published the details of this breach, albeit it did not impose a civil penalty nor propose a criminal prosecution. This is the first time that OFSI has used its new “disclosure” power in this way.
The other noteworthy factor is that Wise’s conduct was treated as “making available” assets to a designated person. Wise’s role was passive – it took no step to transfer or give assets to the Designated Person. Nonetheless, the failure to block the debit card was interpreted as itself amounting to “making available” what should be frozen assets to a designated person. This is helpful in clarifying the breadth of the view taken by OFSI on what can amount to “making available”.
It is being reported (behind a paywall) that an individual has been convicted by the Koblenz Regional Court for exporting engines for the “Altius” drones to Russia in breach of EU sanctions.
The 62-year old unidentified individual was sentenced to 5 years in prison.
The National Anti-Terrorism Centre of Czechia has initiated an investigation into the activities of the Austrian Raiffeisen Bank International due to its subsidiary’s operations in Russia.
An earlier complaint against Raiffeisen Bank had been filed by the Association for Citizens’ and Entrepreneurs’ Rights.
Police have confirmed that the Anti-Terrorism Centre is conducting an investigation regarding the banking group. However, no further details were disclosed.
It has been reported today that the German authorities have arrested a German national on suspicion of exporting dual-use goods to Russia.
The goods were being exported to a Russian arms manufacturer via either Switzerland or Lithuania, and were valued at over 2 million euros, and were being used to manufacture sniper rifles.
The suspect, named as Ulli S, was first arrested in France and then extradited to Germany under a European arrest warrant.
The British authorities today announced the imposition by HM Revenue and Customs of a £1m compound penalty on an unnamed UK company for unlicensed exports to Russia in breach of the UK’s Russian sanctions regulations.
No further information has been released.
The annual report for de Volksbank N.V. has revealed the results of a sanctions-review by the Dutch National Bank.
The report states:
“Furthermore, de Volksbank has initiated a comprehensive remediation project to enhance the customer screening and transaction screening systems. This project will remediate findings from regulatory testing of our screening systems conducted by DNB in the second half of 2022, and is expected to be finalised in the first half of 2024”.
The report also notes that the DNB had identified compliance failings in the AML and anti-terrorist financing space, and de Volksbank has made a provision of €1 million in anticipation of the expected fine.
The German financial services regulator, BaFin, has issued a press release confirming an investigation into the money laundering and sanctions compliance of the bank Varengold Bank AG. The particular focus is Iran sanctions.
BaFin has prohibited the bank from processing payment transactions involving Iran, or person or companies resident in Iran. BaFin has also appointed a representative to oversee compliance with this prohibition.
