Due to the Russian invasion of Ukraine, OFSI (Office of Financial Sanctions Implementation) has undergone some changes in their power. 

We understand that these kinds of regulatory documents can be alienating for our AMP’s (Art Market Participants) who are working hard to comply with regulations. At times the language can feel purposely difficult to decipher and not geared to business owners. 

What is important to remember is that these changes can be broken down into understandable chunks which can act as guidelines for you when transacting high value artwork. 

To save you time, we have reviewed all the information published by GOV.uk so you don’t have to. Below we have compiled a quick summary so that you can understand what this means for your processes moving forward. 

Who and What is OFSI?

OFSI is responsible for implementing sanctions applied by the UK government. They are separate from HMRC and do not supervise your due diligence procedures. In short, as applied to you, OFSI only deals with sanctions. This is different from HMRC who supervises the art market’s compliance with Anti Money Laundering regulations ex. your systems and controls, policies, procedures and training. 

What are the changes we need to be aware of?

OFSI now has the ability to impose civil fines for a financial sanctions breach and publish the details of the breach despite the outcome. 

What does this mean? 

This means that if a gallery has transacted with someone on the financial sanctions list, OFSI has the ability to fine the gallery and that the details of the case will be published. 

Stop. Don’t worry! 

The word fines can be a red flag, but if you have the appropriate AML processes in place this information is simply just - information. OFSI has said that they will only apply fines when it is deemed appropriate and in the public interest to do so. 

This means that they will be looking at the conduct of the gallery [in this case] and will consider if a business suspected they were working with a sanctioned party. They will also look into whether the business had knowledge of this person’s exposure to a financial sanctions risk, and will determine if the business has adequate efforts and processes in place.

Basically this means that if you are conducting due diligence properly, checking against sanctions lists and storing your information safely you are already 90% of the way there. 

However, it is also important to remember that sanctions lists are fluid and can change. For our users we suggest looking at information under the heading ‘Negative Information’ to determine if there are PEP, Sanctions or Reputational Risks to consider.  

We also suggest that you consider utilizing the periodic checking feature to determine when you would like to 'refresh' a report to determine if there have been any changes.

For more information please get in touch via the contact page or sign up for our AML course where we cover PEPs, Sanctions and conducting due diligence.

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