Policing and Crime Act 2017: New financial sanction monetary penalties regime
The Policing and Crime Act (PCA) received Royal Assent on 31 January 2017. Part 8 of the PCA strengthens the arrangements for implementing and enforcing financial sanctions. Financial sanctions are restrictions applied at UK, EU or UN level, that limit the provision of certain financial services or restrict access to financial markets, funds and economic resources in order to achieve a specific foreign policy or national security objective. Financial sanctions come in many forms, depending on the situation which they are related to, for example, restricting named individual's, entities' or bodies' access to funds and economic resources, or directions to cease all business of a specific type with a specified person, group or country. The financial sanctions regimes which are currently in force in the UK can be accessed here.
The provisions of Part 8 of the PCA, which will generally apply UK-wide:
- Increase the maximum penalty for breaches of financial sanctions from 2 to 7 years' in prison.
- Introduce a framework for administrative monetary penalties for breaches of financial sanctions where action short of prosecution is appropriate.
- Include breaches of financial sanctions in the list of offences to which Deferred Prosecution Agreements and Serious Crime Prevention Orders apply.
- Ensure that the UK meets its UN obligations by implementing UN-mandated sanctions without delay.
The monetary penalty regime for enforcing financial sanctions will be administered by HM Treasury and will enable the Treasury to issue monetary penalties under civil law. The Office of Financial Sanctions Implementation (OFSI) is set to publish guidance which will cover:
- An explanation of OFSI's powers under the PCA.
- A summary of OFSI's compliance and enforcement approach.
- An overview of how OFSI will assess whether to apply a monetary penalty, and what will be taken into account.
- An overview of the process that will decide the level of penalty.
- An explanation of how OFSI will impose a penalty, including timescales at each stage and rights of review and appeal.
- A summary of OFSI's proposed approach to publishing information about penalties that have been imposed.
A consultation on the draft guidance closed on 26 January and responses are currently being considered. We will issue a further bulletin once the OFSI guidance has been finalised. The draft text of the guidance was set out in the consultation document, which can be accessed here.