The government announced the launch of a new unit for enforcing Russian trade sanctions today (10 October).
The Office of Trade Sanctions Implementation (OTSI) will offer increased support for businesses to help them comply with sanctions, while also having greater powers to penalise those who breach measures.
The office, first proposed by the Conservative government in December 2023, is designed to ensure enforcement of sanctions targeting Russia following its invasion of Ukraine.
Boosting business compliance
When the unit’s creation was first announced, the industry and economic security minister at the time, Nusrat Ghani, emphasised the need for government to “clamp down on sanctions evaders”, highlighting OTSI’s powers to penalise non-compliance.
These include enhanced powers to investigate breaches, issue civil penalties and refer cases to HMRC for criminal investigation.
The new Labour government is taking a more conciliatory approach, describing the need to make compliance “as straightforward as possible”, which it aims to achieve by providing businesses with new guidance and simple online tools.
Business and trade secretary Jonathan Reynolds said that:
“This new unit will help ensure businesses comply with trade sanctions and take decisive enforcement action where needed so that, together with business, we can continue to exert maximum pressure on Putin’s regime”.
Chartered Institute perspective
Customs and trade expert, Lyn Dewsbury, also said the launch reflects the government’s aim to “raise awareness and support businesses in complying with trade sanctions”, while warning that it has new “information-seeking powers” to support those aims.
She also advised that:
“Businesses and individuals under OTSI’s jurisdiction should proactively establish procedures to respond to information requests and mitigate the risk of violations if they have not done so already.”
Non-compliance
Since the introduction of sanctions in 2022, multiple fines have been issued to exporting firms for breaches.
Most recently, HMRC issued two unnamed firms with a total fine of £348,000, with £258,000 imposed for the unlicensed transfer of dual-use goods in April. An additional £90,000 was levied against a firm in June for the unlicensed export of military goods in June.
Previously, the unlicensed export of military goods has elicited heftier fines. In February 2023, one firm paid £1,883,442 after being found to have committed a breach.
UK sanctions scope
Since Russia’s invasion of Ukraine in February 2022, the UK has imposed sanctions on over £20bn of trade with Russia, with the aim of:
“Encouraging Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine.”
According to the government, this has so far helped deprive Russia of over US$400bn in funds.
Additional interventions
The UK also continues to carry out targeted sanctions against Russian individuals and entities perceived to be contributing to Putin’s war effort.
Just yesterday, the UK announced targeted sanctions on individuals and agencies it deems responsible for alleged chemical weapon attacks carried out by Russia against Ukraine, Politico reports.
Defence secretary John Healey condemned the “horrific” attacks, which he said were in violation of the Chemical Weapons Convention.
Intentional attempts to circumvent sanctions have also been addressed in recent months, with sanctions introduced in September on a “shadow fleet” of 10 ships supporting the export of Russian oil - a major source of the country’s income.
Earlier this year it was reported that despite UK and EU efforts to reduce their reliance on Russian oil, imports received via India have been continued to prop up Russia’s war economy.
