Financial Crime World

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Companies Face Obligations to Report Suspected Sanctions Breaches

In a move aimed at combating international crime, companies in the UK are being reminded of their obligations to report suspected sanctions breaches to the relevant authorities.

Reporting Suspected Sanctions Breaches

Under Section 19 of the Terrorism Act 2000 and the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019, companies may be required to notify the Office for Financial Sanctions Implementation (OFSI) of any suspected breaches. Additionally, companies may have contractual obligations to notify counterparties or regulatory bodies of their involvement in sanctions-related activities.

The article highlights that companies may also consider self-reporting any potential violations to the Serious Fraud Office (SFO), particularly in cases involving international bribery and corruption.

AML Compliance Failings

In addition to reporting suspected sanctions breaches, companies are also expected to maintain adequate anti-money laundering (AML) compliance standards. The UK’s AML legislative regime creates three principal money laundering offences, criminalising the concealment, disguising, converting, transferring or removing of criminal property from the jurisdiction.

  • Companies may be found guilty of money laundering if they fail to disclose suspicious transactions
  • They may also be found guilty if they prejudice an investigation or tip off another person about a potential violation
  • Companies are required to establish and maintain AML policies and procedures

Civil Penalties

In recent years, the Financial Conduct Authority (FCA) has imposed significant civil penalties on financial institutions for breaches of AML compliance requirements. For example:

  • Commerzbank AG was fined £37.8 million for failing to put adequate AML systems and controls in place between 2012 and 2017

Suspicious Activity Reports

The article also highlights the importance of reporting suspicious activity to the relevant authorities. Under the Proceeds of Crime Act (POCA), private entities in the regulated sector are required to report any suspicions of money laundering or terrorist funding to their nominated officer or file a Suspicious Activity Report (SAR) as soon as practicable.

  • Filing a SAR does not absolve companies of their obligation to report subject assets or breaches of sanctions laws to OFSI
  • Both those within and outside the regulated sector may file SARs, and failure to do so can result in penalties or other consequences

Conclusion

In conclusion, companies operating in the UK must be aware of their obligations to report suspected sanctions breaches and maintain adequate AML compliance standards. Failure to comply with these requirements can result in significant financial penalties, damage to reputation, and potential legal action.