Sanctions enforcements: UK and EU bare their teeth

The UK Office of Financial Sanctions Implementation has fined Raphaels Bank for dealing with funds belonging to a sanctioned Egyptian individual

What has happened?

The UK Office of Financial Sanctions Implementation (OFSI) has handed its first-ever fine for a breach of financial sanctions after a little-known bank handled just £200 of assets frozen in connection with a sanctioned Egyptian individual.

What does this mean?

OFSI has hit Raphaels Bank with a £5,000 fine for dealing with funds belonging to a person designated under the Egypt (Asset-Freezing) Regulation.

The fine may be small, but it acts as a warning to financial institutions.

The sanctions body said it had reduced the penalty from £10,000 after the bank reported the breach and co-operated with its investigation.

OFSI said that it had issued the fine after deciding that, on the balance of probabilities, that Raphaels Bank had breached a prohibition imposed by or under financial sanctions legislation and "knew, of had reasonable cause to suspect," that it had breached the prohibition.

Partner Aline Doussin commented: 

"European regulators are evidently taking a stricter approach to EU sanctions enforcements. This first-ever OFSI fine comes as a reminder that EU and UK sanctions laws are not just a tick-box compliance exercise, but must be complied with on a day-to-day basis. It is interesting to note that this fine comes a few weeks after the Dutch Prime Minister called on the EU to "pack more of a punch" when it comes to sanctions policy and pan-EU enforcements".

Meanwhile across the Channel

This fine comes few weeks after the Dutch Prime Minister Mark Rutte called on the EU to "pack more of a punch" when it comes to sanctions.

Giving the annual Churchill Lecture at the Europa Institut at the University of Zurich last month, Rutte said that the EU needs to show a unified front and act in co-ordination when it comes to sanctions.

"Sometimes the EU forms a relatively unified and effective front – think of the sanctions against Russia, Iran and Syria. But more often the EU’s action lacks teeth, as the agreement of all 28 member states is needed and sectional interests often come into play," he said.

He recognised that the requirement of unanimity reflects the fact that foreign policy is part of the core of national sovereignty, but added that when it comes to sanctions, the EU should consider enabling qualified majority voting for specific, defined cases.

According to Rutte, the EU often reacts following an incident or a crisis, such as the Skripal affair and the use of chemical weapons in Syria, which led to quicker decision on an EU sanctions regime to counter the use of chemical weapons.

"At the same time we must be realistic. Too often the EU members are played off against each other. We really have to ask ourselves why US sanctions have so much more impact than EU sanctions, and what we can learn from that," Rutte said.

According to Rutte, companies should be in no doubt that any breach of sanctions will trigger enforcement action throughout the EU.

Next steps

Please contact us if you have any questions on the above or if you would like to hear how we can help you navigate the world of sanctions.


Authored by Aline Doussin

Aline Doussin


© 2020 Hogan Lovells. All rights reserved. "Hogan Lovells" or the “firm” refers to the international legal practice that comprises Hogan Lovells International LLP,Hogan Lovells US LLP and their affiliated businesses, each of which is a separate legal entity. Attorney advertising. Prior results do not guarantee a similar outcome.