OFSI today published updated guidance on enforcement and monetary penalties for breaches of financial sanctions, which now includes a section on ownership and control. The new ownership and control guidance says that:
- Where OFSI determines that a breach has occurred, and an incorrect assessment of ownership and control of an entity is relevant to the commission of the breach, OFSI will consider the degree and quality of research and due diligence conducted on the ownership and control of that entity.
- OFSI does not prescribe the level or type of due diligence to be undertaken to ensure compliance with financial sanctions.
- OFSI will consider appropriate due diligence conducted on the ownership and control of an entity to be a mitigating factor where the ownership and control determination reached was made in good faith and was a reasonable conclusion to draw from such due diligence. OFSI may also consider a failure to carry out appropriate due diligence on the ownership and control of an entity, or the carrying out of any such due diligence in bad faith, as an aggravating factor.
- OFSI will consider whether the level of due diligence conducted was appropriate to the degree of sanctions risk and nature of the transaction, taking into account the nature of a person’s contractual or commercial relationship with the entity. OFSI would expect to see evidence of a decision making process that took account of the sanctions risk and considered what would be an appropriate level of due diligence in light of that risk.
The guidance also sets out:
- Due diligence efforts that OFSI may consider to be potentially mitigating.
- Areas of enquiry that OFSI may expect to be undertaken when seeking to establish whether an entity is owned or controlled by a designated person, whether that ownership and control is formal or indirect / de facto.
United Kingdom