OFSI Imposes Penalty on Deutsche Bank for Russia Sanctions Breaches

Although neither the Cayman Islands nor the BVI yet has the same type of strict liability enforcement regime that was used in this case, it is likely only a matter of time before a similar regime is enacted in the British Overseas Territories.  Accordingly, examples of how OFSI handles such cases is of future relevance to our Cayman Islands and BVI clients.

In this instance, the case was assessed to be “serious”, with a baseline penalty of £300,000 set from the balance of aggravating and mitigating factors.  A 45% discount was then applied, to reflect the voluntary disclosure as well as having settled the case (under the settlement framework introduced by OFSI in February).

The three compliance lessons noted by OFSI are to:

• maintain robust and risk-based screening systems and processes, which may include third-party screening tools so long as their limitations are accounted for (e.g. one here was lacking ownership data that would have identified the connection to a sanctioned entity);
• have strong sanctions onboarding procedures and regular risk-based reviews of customers, including an ongoing understanding of how their customers manage their own sanctions compliance risk; and
• disclose potential breaches to OFSI voluntarily, promptly, and in complete detail, as insufficiencies in these respects may limit the penalty discount provided for disclosure.

Read The full penalty notice.

Maples Group has significant experience in advising on Cayman Islands, BVI, and European Union sanctions law, including but not limited to risk assessment, upstream and downstream asset freezing measures, and specific licence applications.  Please reach out if we can be of assistance.