Tag: Financial Sanctions

The UK’s Office of Financial Sanctions Implementation has issued a Penalty Notice against Sabre Global Technologies Limited (SGTL) imposing a fine of just over £1m against this UK entity.

SGTL continued to provide services to JSC Ural Airlines after that entity was designated in May 2022 and after the fact of the designation was communicated to SGTL by its lawyers on the same day.

Three payments were made to SGTL by JSC Ural Airlines between June and September 2022 totalling $906,576.30. These payments were blocked by SGTL’s bank.

In October 2022 SGTL self-disclosed the breaches to OFSI.

The Penalty Notice identified the following breaches:

1. by invoicing JSC Ural Airlines SGTL made available a financial benefit (and so “funds”) in the form of the discharge of a debt obligation by the airline;
2. by continuing to provide the airline with access to a product providing travel content up until 6 December 2022, SGTL was making an “economic resource” available to the airline;
3. by exploring alternative payment routes to avoid the UK, including the making of a “test” payment of $200 to SGTL’s US bank account, SGTL was circumventing the UK’s sanctions in breach of regulation 19.

These breaches, especially the continued offering of SGTL’s product, were assessed as having a value of £2,634,001.54.

OFSI assessed the breaches as being in the “most serious” category given the value, the duration and the efforts at circumvention. The fine was assessed at the maximum of 50% of the value, and then the company obtained a 20% discount to reflect self-disclosure.

The Penalty Notice makes several other “Notes on Compliance”:

1. “firms must not test, reroute, restructure, or otherwise manipulate payment pathways in order to avoid, evade, or defeat the effect of UK sanctions. Attempts to engineer alternative channels, including staging of payments through third countries, may constitute circumvention and a breach in and of itself. Such conduct will be treated as aggravating and will significantly increase the seriousness of any case“;
2. “firms must be vigilant in identifying what may constitute an “economic resource” under UK sanctions regulations. Economic resources are assets of every kind, whether tangible or intangible, movable or immovable, which are not funds but can be used to obtain funds, goods, or services. Services that can be exchanged, directly or indirectly, for funds, goods, or services may constitute an economic resource even if they are intangible or provided digitally. In particular, firms should not assume that software, data services, or digital tools fall outside the scope of financial sanctions. A service that enables a designated person or entity to generate revenue, maintain operations, or otherwise obtain an economic advantage may amount to making an economic resource available“; and
3. “Although it is reasonable for a firm to take some time to assess the nature and extent of the breach, or seek legal advice, this should not delay an effective response to the breach. In practice, firms should contact OFSI early to inform us of a breach or potential breach. Where full disclosure is not possible, firms should make an early disclosure with partial information on the basis that it is still working out the facts and will make a further and full disclosure as soon as possible“.