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”.