The UK government has been criticised for its “toothless” use of the sanctions regime, as campaigners raised concerns that the enforcement body set up in 2016 to patrol breaches has only ever issued only six fines worth a combined £21m.
As the government announces a fresh wave of sanctions against Russia after the invasion of Ukraine on Thursday, opposition politicians and campaigners warned that the UK’s failure to take action against existing suspected breaches of sanctions “undermines any real deterrent value that UK sanctions could have”.
The Office of Financial Sanctions Implementation (OFSI), set up in 2016 by then chancellor George Osborne to act as a “centre of excellence for financial sanctions”, handed down just one fine in the year to the end of March 2021 despite investigating 132 suspected breaches.
By comparison, the US authorities issued 87 fines worth more than $1.5bn (£1.1bn) in a single year.
Susan Hawley, executive director of campaign group Spotlight on Corruption, said: “The OFSI’s very low enforcement rate and the very low average fine level make OFSI look pretty toothless, and undermine any real deterrent value that UK sanctions could have.
“The OFSI lacks the kind of aggressive and proactive attitude to enforcement that would make the UK’s financial, accounting and legal sectors really sit up and take sanctions breaches seriously.”
She warned that the lack of any criminal enforcement action over sanction breaches raises “real questions as to whether UK sanctions are actually be enforced properly at all”.
Hawley highlighted the UK’s failure to act when a private jet targeted by sanctions against Alexander Lukashenko, Belarus’s autocratic leader and ally of Putin, landed at Luton airport earlier this year. The 13-seater Embraer Legacy jet was one of six aircraft listed by then foreign secretary Dominic Raab last year in sanctions aimed at Lukashenko.
The lack of enforcement action by the OFSI comes despite its latest annual report showing that the total value of sanction breaches reported to the department in the year to March 2020 was £982m. That was a near fourfold increase on the value of reported breaches a year earlier.
Hawley said the OFSI’s track record appeared shockingly weak compared with the US’s Office of Foreign Assets Control (OFAC), which has issued 87 fines worth a combined $1.53bn since 2021.
David Lammy, the shadow foreign secretary, said the government must urgently explain why the OFSI had issued so few fines. He said the figures “show how government incompetence is contributing to the steady stream of dirty money from Russia and other authoritarian regimes flooding into the City of London”.
A No 10 spokesperson said: “We certainly expect the sanctions to be met and we have done a lot of work with the Treasury in ensuring there is an impact. We want these sanctions to have an impact and will listen to views about how we do this.”
An HM Treasury spokesperson said: “We are committed to ensuring business and individuals comply with financial sanctions, and to taking firm action when they don’t. Through our Office of Financial Sanctions Implementation we work to promote compliance in the first instance, and take compliance action against all reported suspected breaches.
