Penalties for a sanction breach can range from monetary to deferred prosecution agreements (DPA) and can be as severe as criminal prosecution. Substantial financial penalties can and have been issued and publicly disclosed which can have severe reputational impact.
Enforcement penalties issued by OFAC in 2019 alone hit a record high of $1.3 billion. The UK regulating body OFSI in 2021, issued their largest fine to date of £20.5 million to Standard Chartered Bank following their alleged breach of sanctions.
It was reported that the bank had provided more than 100 loans to a sanctioned entity, this highlighted that inadequate compliance measures were in place that failed to prevent the breaches. Interestingly, this fine was reduced by 30%, following the bank’s voluntary disclosure and their cooperation throughout the investigation. At the start of 2022 Airbnb agreed to reach a settlement with OFAC for $91,172.29, following its ‘potential civil liability for apparent violations of sanctions against Cuba administered by OFAC’.
A DPA involves a company reaching an agreement with a prosecutor, where the company is charged with a criminal offence but proceedings are automatically suspended. These agreements see companies complying with a number of set conditions ranging from paying financial penalties, cooperation with all ongoing investigations and repairing damages caused.
A notable example, unprecedented in scale, both in terms of the financial penalty obtained and the corruption is the case between the Serious Fraud Office (SFO) and Airbus in 2020. The DPA entered between the two parties was the result of extraordinary levels of bribery discovered within Airbus.
The agreement resulted in a €984 million fine, full disclosure and assistance during the investigation saw more than 30 million documents were reviewed as well as full access to key personnel information involved.
The highest level of reprimand for breaching sanctions is treated as a criminal offence that can lead to prosecution and imprisonment.
An awareness and understanding of the landscape is critical to ensure that business practices are compliant with the constantly evolving regulatory landscape.. The risk of penalties, whether enforced financially or through imprisonment is a factor that should be seriously contemplated and considered by all organisations and businesses.
The risk of reputational damage, criminal charges and even company blacklisting should be regarded as severe enough to ensure a suitable sanctions compliance program and minimum framework exists.
Want to learn more about maritime sanctions compliance?
Further details of the areas discussed within this article can be found within our latest report ‘Maritime Compliance – The rapidly changing maritime sanctions compliance landscape’. This guide to industry includes discussion on the landscape as well as sanctions compliance measures and how best to mitigate against the many associated risks.
