Empowering UK Trade Sanctions Compliance
- Arne Mielken
- Sep 20, 2024
- 5 min read
OTSI to enforce new civil powers in UK trade sanctions from October 2024. Learn what it means for your business compliance now.
What Questions We Will Answer in this blog
What is the significance of OTSI’s new civil enforcement powers?
How can businesses ensure compliance with the new trade, aircraft, and shipping sanctions?
What are the consequences of non-compliance, and how can you mitigate risks?
Introduction
The UK government has unveiled a new Statutory Instrument to arm the soon-to-be-launched Office of Trade Sanctions Implementation (OTSI) with enhanced civil enforcement powers. Starting 10 October 2024, businesses and professionals working in Customs, Export Controls, and Sanctions must be prepared for stricter trade sanctions enforcement. The implications for businesses are profound, and I’ll walk you through everything you need to know to stay ahead of the curve.
“Civil enforcement of trade sanctions is set to become a critical aspect of compliance for all UK businesses trading globally. Stay compliant, or risk the consequences.” – Arne Mielken, Managing Director of Customs Manager Ltd
Abbreviations We Use in this Blog
OTSI: Office of Trade Sanctions Implementation
SIs: Statutory Instruments
What is OTSI’s role in enforcing trade sanctions?
The Office of Trade Sanctions Implementation (OTSI), set to launch in October 2024, will take on the crucial task of overseeing the civil enforcement of trade sanctions.
This includes sanctions related to customs, export controls, and free trade involving the UK and its nexus.
OTSI’s powers cover:
All UK persons, including businesses operating globally.
Any person in the UK or within its territorial waters.
In practice, this means that any UK business or professional engaged in import, export, or related services will be subject to these regulations. Whether you’re a customs agent, consultant, or export specialist, understanding and adhering to these rules is paramount to avoid severe penalties.
How can businesses ensure compliance with new sanctions regulations?
The key to compliance lies in understanding the regulations and the role OTSI will play in enforcing them. OTSI will impose monetary penalties for breaches of sanctions, including those related to customs clearance and shipping. What sets this apart is the strict liability basis, meaning you could face penalties even if the breach was unintentional.
The penalties are significant:
A maximum of £1 million or 50% of the breach’s value, whichever is higher.
Penalties are determined based on the balance of probabilities—a much lower threshold than criminal proceedings, making it easier for OTSI to impose fines.
To avoid these penalties, businesses must take a proactive approach:
Regular training: Ensure your staff are well-versed in the nuances of trade sanctions, customs, and export control compliance. Continuous education will help identify risks early and take corrective action.
Collaboration: Work closely with a customs consultant who can provide you with real-time updates on regulatory changes and offer bespoke strategies for your business.
Attention to detail: Adopt a rigorous approach to documentation and reporting. Sanctions breaches often stem from overlooked details, so vigilance in record-keeping is essential.
"OTSI’s strict liability approach demands a higher level of accountability and professionalism from all involved in UK trade."
What are the penalties and risks of non-compliance?
The consequences of non-compliance are severe and multifaceted. OTSI’s enforcement tools go beyond monetary penalties; they also include public disclosure of breaches, which can severely damage your business’s reputation.
Here’s what you risk by not complying:
Reputation damage: Being publicly named for violating trade sanctions can harm your business’s credibility, damaging relationships with clients, suppliers, and regulatory bodies.
Financial penalties: As mentioned, the fines are hefty—up to £1 million or 50% of the breach value.
Criminal offences: Failure to report or comply with information requests could lead to criminal charges, further escalating the risks.
If you want to avoid these perilous consequences, take immediate steps to ensure full compliance. Implement stringent checks, conduct internal audits, and seek expert advice when necessary. This is not the time to be complacent.
Reporting and Information Requests
One of the critical new powers granted to OTSI is the ability to request information and enforce reporting obligations. Non-compliance with these requests can result in criminal offences—so don’t take these lightly!
Reporting obligations extend to:
All relevant persons subject to UK customs and export control regulations.
Ensuring that all business dealings, particularly those involving sanctioned entities or goods, are fully transparent and reported accurately.
If you fail to provide the required information, or if your report is incomplete or misleading, you could face severe legal repercussions.
Arne’s Takeaway
As the UK tightens its grip on sanctions compliance, OTSI's new civil enforcement powers will hold businesses accountable like never before. The stakes are high, and the penalties are severe, but the key takeaway is this: proactive compliance is your best defence. Equip your team with the right knowledge, collaborate with industry experts, and stay vigilant in monitoring your trade activities.
Expert Recommendations
Stay informed: Regularly check for updates on OTSI’s regulations and enforcement practices.
Implement thorough compliance checks: Ensure every transaction is reviewed for compliance with UK sanctions.
Train your team: Invest in ongoing education for your team on the latest trade sanctions and compliance measures.
How My Team and I Can Help
Along with my dedicated team of trade compliance experts, we offer tailored support for all aspects of customs, export controls, and sanctions compliance. We can help you navigate these new regulations through:
Customised consultancy to ensure your business is fully compliant with OTSI’s regulations.
Training: Our comprehensive public and in-house training programs will keep your team up-to-date with all aspects of UK trade sanctions.
Import/export clearance services: We provide hands-on assistance with customs clearance, so your goods move smoothly, without any compliance hiccups.
For more details, visit www.customsmanager.org.
Sources That We Base Our Information in This Blog On
Our insights are drawn from the latest updates published by the Office of Trade Sanctions Implementation and the Department for Business and Trade, including statutory guidance issued in September 2024.
Where To Find More Information On This Topic
To dive deeper into these sanctions regulations and their enforcement, subscribe to The Export Control & Sanctions Watch—our weekly newsletter, packed with the latest updates on law, guidance, and policy.
For more detailed information, visit our Knowledge Hub at www.customsmanager.info and search for related topics.
More detailed statutory guidance about these regulations, including the reviews and appeals process, can be found on OTSI’s gov.uk website.
The full regulations and the accompanying explanatory memorandum can be found on legislation.gov.uk.
I Am New To Your Website; What Do I Do?
Welcome! We invite you to become a STANDARD Member of our Trade Intelligence service, where you can receive customised updates on topics like customs, sanctions, and export controls—all for free. Sign up at www.customsmanager.info.
Learn With Me
My team and I provide extensive training on UK trade sanctions, including these new civil enforcement regulations. Visit www.customsmanager.org/events to book your course.
About the Author
I (Arne Mielken) am a customs, export control, and sanctions expert with over 20 years of experience. I’ve held executive positions in Big 4 Consultancy, global trade technology firms, and international trade associations. Proud to be a Freeman of the City of London, I’m also a Liveryman of the Worshipful Company of World Traders.
Connect With Me & My Team
Learn more about me on LinkedIn, where I share tips on sanctions and customs compliance.
Disclaimer
This blog is for educational purposes only and should not be construed as legal advice. Consult legal professionals for guidance.
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