New UK trade sanctions enforcement body

England and Wales

The Department of Business and Trade has announced the creation of a new trade sanctions enforcement body, the Office of Trade Sanctions Implementation (“OTSI”). 

In a speech on Monday 11 December, Trade Minister Nusrat Ghani said:

The Office will build up our trade sanctions capability and make sure our sanctions regimes are as impactful as possible.

It will also crack down on companies that breach trade sanctions and so help to facilitate warmongers and tyrants to cling to power. Its remit will include the civil enforcement of trade sanctions, as well as providing guidance to business and supporting compliance.

We expect the Office to be ready to enforce trade sanctions next year once its new legal powers are in force.”

OTSI is the result of a recent cross-government review of the implementation and enforcement of sanctions titled 2023 Integrated Review of Security, Defence, Development and Foreign Policy. The review announced an “Economic Deterrence Initiative” which would be supported by up to £50 million of funding over two years, with a stated objective to “strengthen our diplomatic and economic tools to respond to and deter hostile acts by current and future aggressors”.

OTSI will sit within the Department for Business and Trade, alongside the Export Control Joint Unit (“ECJU”). The new body will focus on the civil enforcement of trade sanctions and will have the power to refer cases to HMRC for criminal prosecution.

No doubt it was a deliberate decision for the new OTSI to share three out of its four initials with OFSI (the Office of Financial Sanctions Implementation). Of course, the “T” in OTSI is for “trade” and OTSI will focus on trade sanctions -such as prohibitions on export or import of certain goods and services to or from particular territories or governments.  OFSI will continue to focus on financial sanctions – typically the asset-freeze provisions of the various regulations. 

We anticipate at least some increase in UK enforcement activity as regards non-financial as well as financial sanctions going forward, with the civil enforcement powers of OTSI playing an important role. One imagines that OTSI will share at least some systems or practices with OFSI. That prospect may not engender great enthusiasm among practitioners, many of whom have been disappointed by the turn-around times for decisions from OFSI. Perhaps the creation of this new agency will provide an opportunity to streamline practices as regards sanctions enforcement in general.