UK OFSI Imposes Largest Penalty to Date for Russia Sanctions Breaches

Between May and December 2022, SGTL continued to provide services to a designated entity and sought to receive payments after designation, including exploring alternative payment routes which amounted to circumvention of UK sanctions.

Although neither the Cayman Islands nor the BVI yet has the same type of strict liability enforcement regime that was applied in this case, a similar regime may well be enacted in the British Overseas Territories. Accordingly, examples of how OFSI handles such cases are likely to be of relevance to our Cayman Islands and BVI clients.

In this instance, the case was assessed to be “most serious”, with a baseline penalty of £1,251,150.73 set from the balance of aggravating and mitigating factors. A 20% 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 2026).

The four compliance lessons noted by OFSI are to:

• not test, reroute, restructure, or otherwise manipulate payment pathways in order to avoid, evade, or defeat the effect of sanctions – which may constitute circumvention and be a breach in and of itself, and will be treated as a significant aggravating factor;
• be vigilant in identifying what may constitute an “economic resource” (in particular, software, data services, and digital tools can be included), and seek specialist legal advice where uncertainty exists;
• maintain up-to-date and tailored policies, procedures, and training, with competent senior oversight, clear accountability, testing of screening systems, and appropriate escalation of red flags and potential concerns; and
• ensure prompt, comprehensive, and detailed reporting of suspected breaches to OFSI, as soon as reasonably practicable. Whilst reasonable time can be taken to assess the nature and extent of the breach, or to seek legal advice, this should not delay an effective response to the breach; and an early disclosure with partial information and a timeline for updates would be expected.

Please see here for 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.