UK Companies Admit Sanctions Breach - But What is Next?

A shrewd Freedom of Information request by Pinsent Masons that revealed many UK companies are violating Russia-related sanctions led to an interesting development. Much remains unclear, however. The penalties have yet to be spelled out, nor the process by which the Treasury plans to assess individual cases. What qualifies as an “honest mistake”? What level of “relevant efforts and checks” will constitute “potential mitigating factors when assessing a breach”? 

Many UK companies will have to undertake special efforts to determine with confidence the extent of the problem in the further reaches of their own organisations and supply chains, especially where both touch on jurisdictions that are not subject to Western sanctions. The incentive to find ways around sanctions remains powerful, and the regulation weak, at least in its practical application. But the need for companies to understand their true risk grows ever more acute, especially where there is a potential connection to Russia’s state-owned natural resources, whose profits help to prop up Putin’s regime, or with its defence sector, which contributes to warfare in Ukraine.