On 28 October 2019, the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, announced a £146,341 fine against Telia Carrier UK Limited (Telia) for indirectly facilitating international telephone calls to SyriaTel in violation of EU asset freeze sanctions against Syria (implemented in the UK under the Syria (European Union Financial Sanctions) Regulations 2012). The fine against Telia was issued on 9 September 2019.
This is the third civil monetary penalty imposed by OFSI using its powers under Part 8 of the Policing and Crime Act 2017 (PCA 2017). It is also the most significant, both in terms of the size of the monetary penalty imposed (compared to the related £5,000 and £10,000 fines imposed on Raphael & Sons plc and Travelex UK Ltd, respectively) and the level of guidance provided by OFSI to corporates required to comply with financial sanctions in the UK.
While the details in OFSI’s Penalty Notice are limited, there are three key takeaways:
- Guidance on OFSI’s interpretation of ‘economic resources’. The act of indirectly facilitating international telephone calls to an asset freeze target was deemed to amount to making economic resources indirectly available to that designated entity. As noted by OFSI, this case “illustrates that ‘economic resources’ can cover a wide variety of tangible and intangible resources and can be provided directly and/or indirectly”.
- Telia exercised its right to a Ministerial review under s.147 PCA 2017. As part of this review, it provided further clarification of the nature of the transactions which was not available to OFSI when the original penalty was imposed. As a result, although the Minister decided to uphold the decision to impose a penalty, the assessed value of the breaches was reduced by 51.25% from £480,000 to £234,000 and the original penalty of £300,000 was reduced by the same percentage.
- Telia failed to voluntarily disclose the violations and, therefore, no discount was applied. It is not currently reported how OFSI became aware of the potential violation, however OFSI states in the penalty notice that this highlights “companies need to be able to recognise when they are in breach of the regulations and take immediate action to stop their activity and report it to OFSI.”
This case follows the recent publication of OFSI’s Annual Review for 2018-19. In this report, OFSI confirmed that a number of live monetary penalty cases were under consideration and noted that between April 2018 and March 2019 it had “received 99 reports of suspected breaches with a reported value of around £262 million”. Taken together, these publications indicate that OFSI will continue to take appropriate and proportionate compliance action, including the imposition of monetary penalties, in instances where corporates have either overlooked or failed to recognise their obligations under UK financial sanctions regulations.