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UK Financial Sanctions Update: OFSI Imposes Monetary Penalty on Clear Junction

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On 21 February, the UK Office of Financial Sanctions Implementation (“OFSI“), announced that it had issued a monetary penalty totaling GBP 36,393.45 to Clear Junction Limited (“Clear Junction“), a provider of payment services. This penalty follows (and is associated with) OFSI’s earlier GBP 50,000 penalty against TransferGo, announced in August 2021 (see our previous blog post here).

The monetary penalty related to 15 transactions made to accounts held by non-sanctioned parties with the Russian National Commercial Bank (“RNCB”), a Designated Party, with a total value of GBP 7,703.68. These payments had been initiated by TransferGo and were the subject of the previously announced penalty.

Clear Junction made a voluntary disclosure of 8 transactions to OFSI, and following its investigation OFSI found a further 8 transactions that were not disclosed (including 5 of which were made after Clear Junction submitted its report to OFSI). OFSI refrained from imposing a penalty in respect of one of the transactions, as this was found to be the result of a technical issue with Clear Junction’s compliance system, which had been resolved.  As Clear Junction had voluntarily disclosed some, but not all, of the payments, OFSI granted a partial reduction for voluntary disclosure of 26.7% (less than the maximum 50% discount that would have been available had all of the payments been disclosed).

Clear Junction exercised its right to have the penalty reviewed under s.147 of the Policing and Crime Act 2017, following which the Economic Secretary to the Treasury decided that the penalty and the amount should be upheld.

This case underlines the UK position that payments to a bank account held at a sanctioned bank may give rise to exposure under the designated party controls – and therefore, that it is vital to screen not only your counterparties, but also the banks involved in the payment chain.  It also underlines the need for disclosures to be full and frank in order to receive maximum credit for disclosure.

To read the full decision, click here.

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Sunny Mann is a Partner in Baker McKenzie's London office and co-leads the UK Compliance and Investigations Practice, as well as the UK International Commercial and Trade Practice. Both these practices are ranked Tier 1 by Legal 500 UK. He has also worked in our Firm's Washington DC, New York and Sydney offices. Sunny also advises many clients on risk matters in India. He advises clients (including numerous FTSE 100 and Fortune 100 businesses) on compliance and investigations with respect to export controls, trade sanctions and anti-bribery rules. The Legal 500 ranked Sunny as a “Leading Practitioner", and as "excellent", with a ‘calm’ and "very practical" approach. The India Business Law Journal also noted that Sunny is "excellent and has deep experience in India". He is a Visiting Professor at the College of Europe, the leading institute for post-graduate European studies, where he teaches a course on Corporate Compliance.

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Sven Bates is Of Counsel for International Trade at Baker McKenzie. He has spent the majority of his career at the Firm's London office, focusing on international trade compliance, trade remedies and anti-bribery. He has also practiced in Amsterdam and has previously worked for the European Commission and the Shadow Attorney General. Sven has extensive experience in particular in the financial services sector, and has undertaken secondments at a Tier 1 UK bank and the Lloyd's insurance market.

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Andrew joined Baker McKenzie's London office as a trainee in 2015 and qualified in 2017. His practice concentrates on compliance with EU/UK trade regulations, as well as anti-bribery and antitrust. Andrew previously was previously seconded to Baker McKenzie's European Competition Law Practice in Brussels.

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