Office of Financial Sanctions Implementation or OFSI is the UK Government department set up to ensure financial sanctions are understood, effectively implemented and enforced within the UK. For more information on OFSI and to get access to the consolidated list of sanctions targets please visit their web site here
The consolidated list of targets is a consolidation of orders as laid down by the EU, UN, and UK domestic orders. They don’t necessarily target those involved in terrorism and as such the type of measures firms need to take, should they identify a match, may be different depending on the order imposed on that target.
It is vital for firms to familiarise themselves with the various orders and guidance within the OFSI website to ensure that their activities do not fall into breach with any of the legislation, as penalties can be severe.
The majority of the list itself contains a mixture of individuals and organisations that are known to be or suspected to be involved with terrorism and/or terrorist financing. There are also individuals and entities that may be on the list for other reasons such as Nuclear non-proliferation, human rights violations, and other serious international crimes.
It is the aim of the sanctions list itself to ensure that firms do not aid individuals and organisations in the transfer or manipulation of funds for the benefit of their activities. In addition, constraints may also be laid down against a target in relation to economic resources which could mean restrictions on them obtaining goods and services.
The financial sanctions list is updated frequently but without consistent regularity. Therefore, it is important to ensure that the list against which you search your clients’ details, is the most current. Moreover, it is equally important to make sure that changes on future lists do not call into question any existing client or transaction. Just because a customer was not on the list at an earlier date does not mean they won't be added to the list later.
Whilst the body ultimately responsible for compliance with financial sanctions within the UK is the Office of Financial Sanctions Implementation (OFSI), other regulatory bodies also accept responsibility for enforcement and compliance such as the Financial Conduct Authority.
The scope of firms falling within the remit has been recently extended by OFSI, as recently published. The list of which is as follows:
This coincided with an announcment of extended powers of enforcement for non reporting.
Obviously if you fall within the group above you need to carry out an appropriate risk assessment to establish if and what you need to do next, however all firms even outside these industries should be acutely aware of the legislation and ensure they are not in breach also.
Beyond the UK, financial sanctions are very similar in how they are compiled and enforced by each of the territories appointed regulatory authority, for example in the US it is handled by the US Treasury under their The Office of Foreign Assets Control (OFAC) program. Again, users should always familiarise themselves with the particular guidance for each jurisdiction that they may be working under to ensure that they are appropriately working within their legal framework.
OFSI Guidance (Please note this will open as a PDF)