MIL-OSI United Kingdom: Penalty issued for breaches linked to Russia’s invasion of Ukraine

The Office of Financial Sanctions Implementation (OFSI) has issued a monetary penalty to Integral Concierge Services (ICSL) for breaches of the financial sanctions regime imposed on Russia in response to its illegal invasion of Ukraine in 2022.

The monetary penalty relates to the property management service ICSL provided to a designated person subject to an asset freeze. Between 2022 and 2023, ICSL made or received 26 payments in connection with the services they were providing to the designated person, despite knowing or having reasonable cause to suspect these were in breach of financial sanctions in the UK.

As a result of these breaches, ICSL was given a penalty of £15,000. ICSL did not challenge the penalty and paid in full.

This penalty demonstrates OFSI’s clear commitment to pursuing financial sanctions breaches wherever they occur. From the largest institutions to the smallest, everyone has an obligation to comply with the UK’s financial sanctions regime. OFSI is prepared to utilise the full extent of its legislative powers to pursue those who commit serious breaches of financial sanctions.

This case was not reported to OFSI by the subject of the penalty, resulting instead from a proactive investigation.

FCDO Sanctions Minister Doughty said:

We are firmly committed to enforcing the UK’s financial sanctions regime. We promised this government would act – and we are putting those involved in breaches on notice. Let this be a strong warning to those who fail to comply.

The UK is continuously working to proactively identify breaches and strengthen our enforcement powers. We will continue to close loopholes, come down hard on sanctions evaders, and crack down on sanctions circumvention to ensure the effectiveness of sanctions against Putin’s Russia, and in the case of other sanctions regimes.

The monetary penalty highlights key lessons for industry, particularly firms involved in the property management sector. This case demonstrates the importance of understanding and taking appropriate action to address financial sanctions risks arising from your business model and client base, particularly if they present heightened sanctions risks. Firms should seek professional advice on their sanctions obligations wherever necessary.

Russia is desperate to get around our sanctions and we will not hesitate to take action against those involved in supplying and funding Putin’s war machine. The government is committed to significantly strengthening our sanctions enforcement, and will continue to prioritise sanctions enforcement at every turn. This includes both public actions, such as monetary penalties, and actions which are not made public, such as warning letters and referrals to regulators. Following the introduction of strict civil liability for financial sanctions breaches in June 2022, OFSI is now also able to take action regardless of whether a person knew or had reasonable cause to suspect they would be in breach.