OFSI Imposes First-Ever Monetary Penalty for a Failure to Comply with a Statutory Request for Information

HM Treasury’s Office of Financial Sanctions Implementation (“OFSI”) has published a penalty notice concerning a £5,000 civil monetary penalty imposed on Svarog Shipping & Trading Company Limited (“Svarog”) on April 11, 2025, for failing to comply with an OFSI statutory request for information (“RFI”) within the specified time limit without a reasonable excuse under the UK’s Russia (Sanctions) (EU Exit) Regulations 2019 (the “Russia Regulations”).  This marks the first time OFSI has issued a financial penalty solely for an information offence, and represents the second OFSI enforcement action in two months to target a failure to respond to an RFI issued by OFSI (see here for our previous blog post on the prior enforcement action).  These enforcement actions underscore the importance of implementing and communicating procedures to ensure the provision of accurate and timely responses to OFSI RFIs and suggests that RFIs increasingly are being used by OFSI as a tool to assist with the pro-active investigation of potential breaches of UK financial sanctions.

OFSI’s Information Gathering Powers

OFSI has the powers under the Russia Regulations to issue RFIs that require UK designated persons, persons acting under an OFSI licence, and certain other persons to provide OFSI with particular categories of information within a specified timeframe.  The reasons OFSI might request this information include to establish the nature of financial transactions entered into by UK designated persons, as well as to monitor compliance with and detect breaches of UK financial sanctions or the terms of OFSI licences.  

The Svarog Enforcement Action 

Svarog is a UK-registered fuel transportation company operating in the maritime oil shipment sector that carries out its business operations from Cyprus.  The current enforcement action arose from a complex OFSI investigation into certain transactions Svarog had entered into with a subsidiary of UK designated Sovcomflot, the Russian state-owned shipping company.  While OFSI ultimately concluded that Svarog’s involvement in those transactions had not breached UK financial sanctions, OFSI took enforcement against Svarog for its failure to respond to an RFI issued during the investigative process on January 26, 2024.

The RFI required Svarog to provide a response to OFSI’s information requests by February 9, 2024.  However, despite multiple reminders Svarog did not provide a response within before the deadline.  OFSI eventually received an RFI response from Svarog after bringing the matter to the attention of Svarog’s auditors.  While Svarog apologised, it failed to provide any reasonable excuse for its delayed compliance with the RFI.  Therefore, OFSI concluded that Svarog had breached Regulation 74(1)(a) of the Russia Regulations.

Notwithstanding that the case involved indirect and low levels of harm to the UK’s Russia sanctions regime, OFSI decided to impose a civil monetary penalty on Svarog for this breach because Svarog: (i) was aware that OFSI intended to send it an RFI and that it had an obligation to respond, but failed to take reasonable care to comply with its obligation to respond to the RFI timely; (ii) should have been more vigilant in complying with its obligations because it had demonstrated awareness of sanctions risks and operated in the maritime oil shipment sector, which has a heightened exposure to sanctions risk (especially in relation to Russia); and (iii) failed to provide information relating to UK financial sanctions breaches on time in response to OFSI’s RFI.  Additionally, OFSI concluded that Svarog’s conduct had delayed OFSI’s investigation of potential sanctions breaches, as well as causing wasted OFSI resources.  In its penalty notice,  OFSI noted that these impediments – if replicated across other enquiries – could undermine OFSI’s effectiveness and efficiency by diverting resources away from enforcement activity.

Key Takeaways

This case underscores the vital importance of responding promptly and thoroughly to RFIs from OFSI.  RFIs are backed by statutory enforcement and penalty powers and non-compliance can result in financial penalties, as well as reputational harm.  OFSI expects businesses in receipt of an RFI to:

1. Treat RFIs with urgency and seriousness – OFSI has stated that it takes “a dim view of firms who delay or fail to respond” to RFIs. Businesses must recognise the importance OFSI attaches to its information gathering powers and that ignoring or providing delayed responses to RFIs may result in enforcement action, regardless of whether underlying financial sanctions breaches are ultimately found to have occurred.
2. Engage proactively with OFSI - If a business is unsure what is required to respond appropriately to an RFI or cannot meet the deadline for response set in an RFI they should promptly contact OFSI to seek clarification or an extension, as appropriate. If an RFI response deadline has been missed in circumstances where a person has a reasonable excuse for failing to respond, that explanation should be provided to OFSI promptly for its consideration.  Adopting a pro-active and candid approach with OFSI can reduce the risk of a breach arising or mitigate the risk of a penalty being imposed in relation to any identified breaches.
3. Maintain effective internal controls – Businesses, particularly those operating in sectors posing an elevated sanctions risk, should have robust systems and processes in place to address and respond to RFIs. This includes appointing designated personnel with responsibility for oversight of RFI responses, as well as monitoring communication channels and keeping contact information up to date.
4. Be mindful of broader reporting obligations – Businesses should ensure they are aware of the full extent of their reporting obligations under UK sanctions regulations, for example, the mandatory reporting requirements imposed on so-called “relevant firms” and reporting obligations imposed under general and specific licences issued by OFSI.

The Svarog case offers a timely reminder of the breadth of the obligations imposed under UK financial sanctions regulations, as well as the willingness of OFSI to take enforcement action when businesses fail to comply with the full range of these obligations.  Businesses required to comply with UK sanctions should ensure that they have appropriate policies and procedures in place to support compliance with their obligations to respond to RFIs promptly and completely.  For more information on these developments, contact the authors of this post, Alexandra Melia or Elliot Letts, in Steptoe’s Economic Sanctions team in London.