UK sanctions body to step up action on Iran

• Enforcing sanctions a priority
• Fines may double to £2m
• Rules also apply to UK firms overseas

The UK’s sanctions enforcement body is looking to take action against businesses that have unlawfully traded with Iran.

The pledge from the Office of Financial Sanctions Implementation (OFSI), part of the UK Treasury, comes as UK lawmakers consider proposals to double the maximum ceiling for sanctions-related fines to £2 million ($2.66 million).

OFSI director Giles Thomson said the body was “increasingly looking” to take action over Iran, even while an extended ceasefire remains in place.

“In recent months, Iran sanctions have expanded in scope and we’re also increasingly looking at where there might be enforcement action we might want to take there,” Thomson said.

Under an interim peace deal signed last month, Washington waived sanctions on Iranian oil exports until August 21 and pledged to lift all types of sanctions on the Islamic Republic if and when a final agreement is reached to end the war.

However, Thomson’s statements indicate that enforcement of UK sanctions remains a priority for the OFSI, whose mandate is to investigate and act against individuals and entities that may have breached the sanctions regime.

The UK’s sanctions regulations impose asset freezes on persons or entities identified as being responsible for or involved in serious human rights violations in Iran or hostile activity by the government of Iran. The UK also implements a sanctions regime on Iran related to nuclear weapons.

UK financial sanctions apply to any business conduct in the UK, and to all UK persons or companies – including legal entities established under UK law – anywhere else in the world.

That includes non-UK companies using UK financial institutions to conduct payments, even if the non-UK company directly manages the account from outside the UK, according to the Treasury.

Penalties are imposed based on the seriousness of the case. The maximum fine is £1 million or 50 percent of the value of the breach, but following a review last year, the OFSI plans to increase this to £2 million or 100 percent of the value of the breach to strengthen deterrence.

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It would be the first time the body has altered the cap since its introduction in 2017 and any increase would not come into effect until legislation is passed. Thomson told the Financial Times this is expected “in the next few months”.

Despite the US pledge to gradually unwind sanctions, it could take months or years before businesses regain confidence in Iran.

“I don’t hear anything from any of my global clients… expressing a shred of interest in doing anything in Iran,” Oliver Wyman partner Daniel Tannebaum told AGBI last month.