On 5 August 2021, OFSI¹ announced the imposition of a monetary penalty of £50,000 on TransferGo Limited (TransferGo), a regulated fintech company specialising in international money transfers, for breaching financial sanctions under the Ukraine (European Union Financial Sanctions) (No. 2) Regulations 2014 (the UK Regulations)². This is only the fifth monetary penalty that OFSI has issued in total.

Between March 2018 and December 2019, TransferGo made 16 transfers of funds totalling £7,764.77 to accounts held by non-designated persons with the Russian National Commercial Bank (RNCB) which is itself a designated entity under Council Regulation (EU) No 269/2014 (the EU Regulation), which was at the time directly applicable in the UK.

The TransferGo decision provides some insights into OFSI’s enforcement approach and highlights some sanctions compliance considerations for companies doing business in the UK:

• OFSI's penalty notice stressed that OFSI would continue to investigate, and impose monetary penalties for breaches which occurred under the EU sanctions regime. The fact that the UK had left the EU legal framework by the time of the decision was not relevant.
• This case had come to OFSI's attention via a suspected breach report filed by a third party. OFSI noted that TransferGo was a "relevant institution" to which self-disclosure obligations apply, and that it had not done so despite OFSI's finding that it knew or had reasonable cause to suspect that the payments were in breach of the UK sanctions. A disclosure must be proactive "as soon as reasonably practicable" and "include all the evidence relating to all the facts of the breach". TransferGo disclosed some transactions in response to OFSI's information requests but this was not sufficient to enable it to secure a reduction in penalty.
• It was not relevant that the accountholders at RNCB (the ultimate payees) were not themselves subject to financial sanctions restrictions. 
• OFSI criticised TransferGo for having "poor" understanding of the extent and complexity of its sanctions obligations throughout its engagement with OFSI. As a firm regulated by the FCA and supervised by HMRC, TransferGo is obliged to maintain systems and controls to prevent financial crime, including sanctions violations, and had failed to meet that obligation.
• The transfers made by TransferGo amounted to £7,764.77 being made available to RNCB, leading to a penalty of £50,000. OFSI's guidance³ indicates that enforcement action is more likely in the case of high-value breaches. This enforcement demonstrates that OFSI will also penalise low-value breaches, even where (as here) it has found them to be the result of poor controls and understanding, rather than deliberate.
• TransferGo appealed OFSI's penalty amount through the statutory appeal process, which involves review by an appropriate government minister. In two previous penalty cases, such ministerial reviews have resulted in reductions of civil penalties. In this case, however, the review process did not change the amount of the penalty.
• In addition, TransferGo requested anonymity from the minister reviewing the case, should the penalty be upheld. The minister considered that such anonymity would be contrary to the objectives of OFSI's sanctions enforcement regime and was not in the public interest. This is in line with the five monetary penalties issued by OFSI to date and confirms that it will be difficult for a company to obtain anonymity in case of an enforcement action from OFSI. 

This penalty decision highlights that OFSI will expect regulated entities in particular to have a good understanding of the requirements of sanctions compliance, and procedures to match, including detection and self-reporting. Where an entity falls short, it can expect a significant penalty, even in relation to a very low-value violation. 

Dentons' sanctions teams in the UK and globally can help firms to understand the scope of their sanctions obligations and to develop suitably robust and proactive compliance programmes.

1. The Office of Financial Sanctions Implementation, which is part of HM Treasury
2. OFSI decision here
3. OFSI guidance: Monetary penalties for breaches of financial sanctions, April 2021 edition, at para 3.17: "Value of the breach"