How suspected breaches of trade sanctions are assessed by the Office of Trade Sanctions Implementation (OTSI)

Which breaches OTSI can investigate and enforce

The Office of Trade Sanctions Implementation (OTSI), which is part of the Department for Business and Trade (DBT), has powers to enforce certain trade sanctions.  

They have the power to investigate suspected breaches of trade sanctions and take enforcement action in relation to:

• providing or procuring sanctioned services 

• moving, making available, or acquiring sanctioned goods outside the UK 

• transferring, making available or acquiring sanctioned technology outside the UK 

• providing ancillary services to the movement, making available or acquisition of sanctioned goods outside the UK 

• providing ancillary services to the transfer, making available or acquisition of sanctioned technology outside the UK 

OTSI also has powers to investigate and enforce breaches related to the trade sanctions measures set out above, regarding:  

• circumvention, such as intentionally facilitating the contravention of sanctions 

• exceptions, such as failing to comply with the notification requirement of an exception 

• information requests, such as intentionally obstructing an information request from OTSI 

• licensing, such as failing to comply with the conditions of a licence 

• recordkeeping, such as failing to comply with recordkeeping requirements of a general licence 

• reporting obligations, such as a relevant person failing to comply with their obligations to report suspected breaches 

OTSI can issue warnings and use their powers to publish information about breaches, impose civil monetary penalties and refer cases to HM Revenue and Customs (HMRC) for criminal investigation. OTSI can also report individuals and businesses to their regulator, if they have one, and share information with organisations such as Companies House or the Insolvency Service. 

OTSI’s enforcement powers are set out in the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024. 

There are other types of trade sanctions which are implemented and enforced by HMRC, HM Treasury or Ofcom: these are therefore not subject to OTSI’s powers. 

Who OTSI can investigate

Trade sanctions apply to: 

• all individuals or businesses within the territory and territorial sea of the UK 

• all UK nationals or UK businesses established under UK law, wherever they are in the world 

This means OTSI can investigate suspected breaches committed by: 

• individuals and legal entities who are within, or undertake activities within, the UK’s territory 

• UK individuals and legal entities established under UK law, regardless of where in the world the breach takes place 

Case assessment

When OTSI assesses a suspected breach of trade sanctions, they first seek to establish whether there’s been a breach of a prohibition, or a failure to comply with an obligation under trade sanctions regulations.  

If there has not been a breach of a prohibition or a failure to comply, they’ll close the case.  

Most breaches of trade sanctions will be assessed as ‘strict liability’ offences. This means OTSI does not need to prove that you acted knowingly, or with intent. If you use as a defence that you did not know you’d committed a breach, or had no reasonable cause to suspect, they can disregard this when they’re deciding whether to issue a penalty. 

Some offences, such as the circumventing prohibitions, still require OTSI to prove that you acted knowingly or with intent.  

Case outcomes

Once OTSI has determined that a breach has occurred, there are one or more potential outcomes. 

Warning letter

OTSI can issue warning letters. These may include a continuing obligation to keep them informed about certain information, such as the improvement of due diligence processes. 

Referral to your regulator

If your business is in the regulated sector and has committed a breach, OTSI may refer the case to your regulator.  

Referral to other organisations

If a company is involved in the breach, OTSI may refer the case to Companies House, which has the power to remove a person as company director, if warranted.  

OTSI may refer a case to the Insolvency Service. 

Public disclosure

Where OTSI judges that it would be in the public interest to share information about a breach, for example, to assist compliance officers, they may publicise details about a breach.  

Civil monetary penalty

Some breaches may result in OTSI imposing a civil monetary penalty to the value of 50% of the value of the breach, or £1 million, whichever is greater. 

Read more about civil monetary penalties. penalties. 

Referral to HMRC

OTSI may refer cases to HMRC where they feel that HMRC’s criminal enforcement powers, including referral for prosecution, are more appropriate. 

Mitigating factors

Once OTSI has established there has been a breach, they’ll consider a range of case factors in determining the enforcement action.  

Mitigating factors include (but are not limited to): 

• timely voluntary disclosure of the suspected breach by the person or business responsible, which could lead to a reduction in civil monetary penalty of up to 50% 

• timely mandatory disclosure of the suspected breach by a provider of legal or financial services  services  

• compliance with requests for information that OTSI may send out to reporters of suspected breaches during their investigations 

• compliance with any relevant recordkeeping obligations under sanctions regulations 

• no record of previously having breached sanctions legislation 

• good knowledge of trade sanctions and relevant compliance systems proportionate to the size, exposure to sanctions and resources of the business 

How OTSI will work with other government bodies

OTSI works closely with other government bodies with responsibilities for UK sanctions enforcement, in particular, with HMRC, which is responsible for criminal enforcement of trade sanctions measures. 

Some cases may involve breaches across more than one type of sanction. For example, if you make prohibited services available to a designated person, you may be breaching both trade sanctions and financial sanctions. In such cases, OTSI will coordinate their enforcement action with the Office of Financial Sanctions Implementation (OFSI) to ensure it remains proportionate. 

Report a suspected breach of trade sanctions

If you suspect that you, or someone else, has breached trade sanctions, you should report it to OTSI as soon as possible.possible, using the online service to report a suspected breach of trade sanctions.

If you’re unclear whether action you’re considering, or have already taken, could breach the regulations, you should consider seeking independent legal advice. 

Get help

Contact OTSI using the enquiry form.