- within Law Department Performance topic(s)
The UK's Office of Financial Sanctions Implementation has issued a Penalty Notice fining the Irish-incorporated company Apple Distribution International Limited ("ADIL"), £390,000 for breaches of the UK's Russian sanctions.
ADIL was fined for issuing payment instructions to a UK bank, and for failing to cancel those payment instructions. The two payments in June and July 2022 for a total of £635,618.75 were to Okko LLC, a company wholly owned by the designated person JSC New Opportunities.
OFSI took the view that the instructions issued to a UK bank, and the failure to cancel those instructions, amounted to conduct within the UK for the purposes of the jurisdictional reach of the UK's sanctions. This is in line with older case law that had established that sending instructions into the UK could amount to an offence within the UK.
ADIL self-disclosed the conduct in October 2022. The Penalty Notice was also arrived at by way of an agreed settlement pursuant to OFSI's new enforcement procedures.
The penalty is also noteworthy because JSC New Opportunities was designated by the UK at 11am on 29 June 2022. The first payment instruction had been made on 6 June but with a value date of 30 June. The second payment instruction was issued on 30 June with a value date of 28 July 2022.
OFSI took the view that there was a "narrow window" in which the first payment could have been stopped, and that it was an aggravating factor justifying enforcement action that a second payment had been ordered. The Penalty Notice also expressly states that OFSI was relying on the "strict liability" enforcement rules that come into effect in 15 June 2022. Earlier payments made to Okko LLC, while it had been owned by a different designated person were also made in breach of the UK's sanctions, but were not the subject of OFSI's enforcement action as they took place before the coming into force of the "strict liability" rules.
OFSI also stated that despite the failings of the external screening provider used by ADLI, it was ultimately ADLI's responsibility as the payment issuer, to ensure compliance with the UK's sanctions.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
