“Our status as a global financial centre makes us an attractive location for investment – and we are proud of that. We welcome it. But it also makes us a honeypot, a lightning rod for corrupt actors who seek to launder their dirty money through British banks or through businesses.” Dominic Raab, Foreign Secretary
The UK has strengthened its armoury of weapons for preventing and combating serious corruption with the establishment of its global anti-corruption sanctions regime.
The Global Anti-Corruption Sanctions Regulations 2021 (the “Regulations”) came into force on 26 April 2021 and specifically target those individuals and entities bribing or misappropriating property from a foreign public official or profiting from such bribery or misappropriation.
The Regulations enable the Secretary of State to designate persons where there are “reasonable grounds to suspect” that the person is “involved” in serious corruption activities of the type mentioned above. In practical terms, anybody listed as a designated person is prevented from entering the UK, opening UK bank accounts and doing business with UK businesses. Furthermore, any assets that they already hold or have invested in the UK are frozen.
Those convicted of breaching the primary financial prohibitions in the Regulations are guilty of a criminal offence that carries a maximum custodial sentence of 7 years’ imprisonment or a fine (or both).
The Regulations also place reporting obligations on businesses if they know or have reasonable cause to suspect that an offence has taken place. In such circumstances, that business must stop dealing with the person or organisation in question, freeze any assets being held for them and inform the Office of Financial Sanctions Implementation (OFSI) immediately. Breaches of the reporting obligations carry a maximum custodial sentence of 6 months’ imprisonment or a fine (or both).
Why the sanctions?
Together with the Proceeds of Crime Act 2002 and the UK Bribery Act 2010, the Regulations add an additional layer of security to the UK’s corruption enforcement programme. The timing and content of the Regulations suggest that post-Brexit, the UK intends to align itself more closely with the US sanctions strategy and away from the EU approach. By illustration, the announcement of the Regulations took place on the same day that the US announced its own corruption related measures and all 22 of the individuals targeted by the Regulations to date have previously been sanctioned under the US regime.
For UK businesses, the introduction of the Regulations underlines the importance of keeping sanctions processes and controls under regular review so that they adapt to the changing sanctions landscape in the UK. This is particularly true in view of the tough penalties that can be levied under the Regulations if a business fails in its reporting obligations.
Multi-national businesses in particular, must be conscious that compliance with US and EU sanctions regimes will not automatically ensure compliance with UK sanctions. This is likely to become increasingly the case across the regulatory spectrum as the UK establishes more of its own stand-alone compliance measures in the post-Brexit world.
If you have any concerns about sanctions or compliance matters more generally, we’re here to help – get in touch.