New data suggests that 37 businesses with ties to the UK are currently under investigation for potential breaches of the UK's sanctions against Russia. With steps being taken to crack down on sanctions circumvention, UK companies must take steps to ensure they comply with the UK sanctions regime.
In 2019 the UK imposed financial, trade, transport and immigration sanctions on Russia intended to encourage Russia to cease actions that destabilise Ukraine.
The impact of this regime, which has continued to expand following Russia's invasion of Ukraine in early 2022, has been far-reaching with companies across the UK putting in place measures to ensure compliance.
However, despite the wide scope of this regime, reports continue to surface that companies with ties to the UK are finding ways to circumvent the sanctions regime and exploit loopholes in the UK's regulatory framework.
New data published by the BBC now suggests that 37 businesses with ties to the UK are currently under investigation for potential breaches of the UK's sanctions against the import and transport of Russian oil.
The data which was obtained following a Freedom of Information request shows that the UK's Office of Financial Sanctions Implementation (OFSI) has opened investigations into 52 companies for suspected breaches of the UK price cap on Russian oil since 2022. While 15 of these investigations have now been concluded, 37 remain live with no fines having been handed out to date.
The UK currently operates a multi-pronged approach in relation to the import and shipping of Russian oil. UK trade sanctions prohibit the import of all oil and oil products that originate from Russia into the UK.
These are supplemented by UK financial sanctions, intended to place further pressure on the Russian economy by stopping UK tankers, insurance companies and credit institutions from facilitating the shipping of any Russian crude oil sold for more than $60 a barrel. The current investigations are reported to relate to breaches of these financial sanctions.
The BBC's report is likely to pile further pressure on OFSI and the UK government which had already come under criticism for failing to effectively enforce the UK sanctions regime. The data released by the BBC follows on from several reports of apparent sanctions circumvention in recent months.
In February the BBC published a report suggesting that Russia was exploiting a loophole in the UK sanctions regime to continue to sell oil and oil products into the UK market. In March data was published by Sky News suggesting that the UK's automotive industry was finding ways to circumvent sanctions to continue to sell hundreds of millions of pounds worth of cars to Russia.
Following the publishing of the UK government's first sanctions strategy earlier this year, steps are being taken to attempt to crack down on sanctions circumvention. This includes the launch of the Office of Trade Sanctions Implementation (OTSI) at the start of October. OTSI, which will act as a sister organisation to OFSI with a focus on trade sanctions, will have enhanced powers to crack down on breaches of sanctions. The launch of OTSI comes shortly after OFSI imposed its first Russia-related penalty last month.
With the UK government taking steps to close the loopholes which exist within the current sanctions framework, UK businesses should be careful not to become complacent about sanctions enforcement. Failure to comply with the UK's sanctions may result in imprisonment, fines, or a combination of both. It is crucial to take all necessary steps to ensure compliance with the sanctions regime to avoid facing significant consequences.
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