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UK and U.S. Announce ‘Enhanced Partnership’ on Economic Sanctions Implementation, Enforcement

The United Kingdom and United States announced in a joint statement on 17 October a new strategy to cooperate and collaborate further on economic sanctions implementation and enforcement.

The partnership will see the UK’s Office of Financial Sanctions Implementation (OFSI) and the U.S. Office of Foreign Assets Control (OFAC):

  • further exchange best practices and strengthen working relationships;

  • pool their expertise;

  • think creatively about sanctions challenges;

  • align sanctions implementation; and

  • better support sanctions compliance through jointly issued products or guidance.

The statement solidifies the recent unprecedented levels of coordination between OFAC and OFSI this year, particularly in the wake of the Russian invasion of Ukraine. OFAC-OFSI already coordinate on priorities such as cyber threats and the misuse of virtual assets, improving information sharing, and minimizing unintended humanitarian and collateral consequences to sanctions implementation.

Leading sanctioning countries, including the U.S. and UK, have already been cooperating in relation to Russia-related sanctions regimes, but inconsistencies between overlapping sanctions regimes have created compliance challenges for companies and persons subject to the various regimes. OFSI and OFAC say they recognise that the growing scale of sanctions has increased the complexity of their implementation. Such complexity makes sanctions compliance more difficult. Greater OFAC-OFSI collaboration and cooperation will therefore be a welcome development, particularly for multinational companies who must navigate multiple and sometimes competing sanctions regimes.

For OFSI, which is younger than its U.S. counterpart, the new partnership may help alleviate resourcing issues. In the last year, in relation to Russia-related sanctions, as well as regularly engaging with stakeholders and issuing extensive guidance, OFAC has issued over 2000 responses to specific licence and interpretative guidance requests and over 50 General Licences. By contrast, no reference is made in the statement to the number of specific licence requests OFSI has handled, only that it has issued over 30 General Licences, is engaging with industry, and has updated its guidance. The OFAC-OFSI statement appears to acknowledge OFSI’s challenges, noting OFSI’s aim to move to “a larger and more proactive organisation” and that it intends to grow to over 100 staff members by the end of the financial year. Potentially significant in this regard is that, while OFAC has existed for over 50 years, OFSI, established in 2016, is a relatively new office. This close cooperation and coordination should assist OFSI’s growth, bolstering its resources and enhancing its ability to handle complex sanctions implementation and enforcement.

The multilateral approach is expected to make the sanctions more impactful, minimise unintended consequences, render compliance complexities less burdensome, and further coordination, especially between OFSI and other sanctioning authorities. OFSI and OFAC anticipate that the partnership will bring significant benefits to both organisations and also encourage and allow for greater collaboration with other key allies. In addition, for international businesses navigating compliance with developing sanctions regimes, any clarity the partnership can bring on best practices will be welcome.

While the joint OFAC-OFSI statement does not articulate this explicitly, increased coordination on implementation should mean increased collaboration and sharing of information and resources for the investigation of alleged sanctions violations (including evasion or circumvention) and enforcement cases. OFAC and OFSI will likely continue to coordinate closely with EU authorities. Multinationals in particular should prepare for increased number and scale of sanctions enforcement matters (potentially multilateral) for years to come, as governmental resources continue to ramp up and scrutiny on potential sanctions evaders intensifies.

©2023 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 292
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About this Author

Shareholder

Annabel Thomas is an experienced commercial litigator with a strong background in corporate disputes and civil fraud. She represents clients on matters involving asset-tracing and injunctive relief; partnership disputes; competition law; and regulatory/disciplinary litigation. She also handles company and shareholder disputes (including unfair prejudice claims, breach of directors' duties, JV disputes, LLP disputes and breach of warranty and indemnity claims), as well as insurance disputes (including coverage, subrogated recovery and brokers' negligence). Annabel's...

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Kara Bombach, Greenberg Traurig, Washington DC, International Trade and White Collar Defense Attorney
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Kara Bombach assists companies to lawfully export goods, technology and services around the globe. She places significant emphasis on helping clients achieve practical, workable solutions to complex regulatory situations arising under anti-corruption and anti-bribery measures (U.S. Foreign Corrupt Practices Act (FCPA) and OECD Convention), export control laws (EAR and ITAR), anti-boycott laws, and special sanctions (embargoes) maintained by the U.S. government (OFAC and other agencies) against various countries (including Iran, Cuba and Sudan), entities and individuals....

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Senior Associate

Gavin Costelloe is a senior associate in Greenberg Traurig’s White Collar Defense & Special Investigations Practice in London. Gavin is a former lawyer and prosecutor for the UK’s Serious Fraud Office (SFO). Gavin advises companies and individuals on internal, government and regulatory investigations and compliance issues related to the UK Bribery Act, fraud, market manipulation, anti-money laundering, economic sanctions, and other serious and complex cross-jurisdictional matters. Gavin has considerable experience assisting with diligence for mergers, acquisitions,...

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Associate

Bethany Histed focuses her practice on commercial litigation, civil fraud, and complex multi-jurisdictional disputes. She has worked on complex contentious cases of significant value involving allegations of fraud, conspiracy, breach of fiduciary and directors’ duties, breach of contract, claims under the Insolvency Act 1986, and unfair prejudice petitions under section 994 of the Companies Act 2006. Bethany also has experience of dealing with asset disclosure and preservation issues.

Bethany acts for a wide range of clients including high-net-...

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Tina Kang London Litigator Greenberg Traurig
Associate

Tina Kang is a member of the Litigation Practice in Greenberg Traurig’s London office. She focuses her practice on complex civil fraud claims and business disputes.

Tina has experience representing both claimants and defendants in contentious cases of significant value, often involving allegations of fraud, conspiracy, breach of contract, and breach of fiduciary and directors' duties. She also has experience in international arbitration and has acted for a variety of clients in employment disputes and real estate litigation.

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