UK Penalizes Oil Transportation Company for Failing to Respond to Sanctions Questions
The U.K. this week fined a fuel transportation company about $6,600, or 5,000 pounds, for failing to respond to a request for information from the Office of Financial Sanctions Implementation. OFSI said U.K.-registered Svarog Shipping & Trading Company Limited, which does business in the maritime oil shipment sector in Cyprus, didn’t respond in time to OFSI questions last year despite receiving “multiple reminders” about the deadline.
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The agency said it asked the questions of Svarog in January 2024 after learning the company potentially used a general license that authorized certain wind-down transactions with Sovcomflot, Russia largest shipping company, which is subject to U.K. sanctions. OFSI said Svarog had “transacted” with a Sovcomflot subsidiary, but it stressed that Svarog didn’t violate any sanctions “other than in respect of this failure to respond offence.”
OFSI only received a response from Svarog after the agency contacted Svarog’s auditors. “Whilst Svarog apologised for failing to respond” to the request, the agency said, “Svarog failed to provide a reasonable excuse for missing the statutory deadline.”
Several aggravating factors contributed to the penalty, including the fact that Svarog was “aware” that OFSI planned to send the request for information and that it “had an obligation to respond.” The company “did not take reasonable care to trace and respond to these emails, only addressing the matter after the deadline had already passed and after being contacted by their auditors,” OFSI said. “OFSI considered this to be evidence of neglect or failure to take reasonable care to comply with its obligations.”
The agency also said Svarog’s business in the maritime oil shipping sector means it has “elevated exposure to sanctions,” especially to Russia sanctions, and the company has “demonstrated some awareness” about those risks. This “ought to have made Svarog more vigilant to OFSI's request and prompted a robust response process.”
OFSI also pointed to several mitigating factors, including that there “were indirect and low levels of actual harm” to the U.K.’s Russia sanctions regime. It also noted that Svarog ultimately responded to OFSI.
The agency said it’s important that companies respond in time to its request because answers to those questions can help the U.K. investigate sanctions violations. “When compliance obligations are neglected, it can impede OFSI’s prompt access to information, thereby affecting OFSI’s overall effectiveness,” it said. Svarog’s failure to respond in time “caused delay and wasted OFSI’s resources.”
Companies should make sure they have “effective communication and monitoring systems in place to respond to OFSI, including by appointing the right employees to oversee those responses and making sure their contract information with OFSI is up-to-date. Publishing this penalty “is expected to encourage future compliance,” OFSI said.
If companies are unsure about how to respond to OFSI or believe they can’t meet the agency’s deadline, they should contact the agency as soon as possible or request an extension. “They should not ignore the request,” the agency said. If a company realizes it missed a deadline but has a reasonable excuse, “it should provide that excuse proactively for OFSI to consider, accompanied by a full explanation of the circumstances.”
OFSI in March said three U.K.-registered charity organizations violated the country’s financial sanctions regulations when they also failed to respond to letters from the agency (see 2503170003). OFSI didn’t fine those charities.