OFSI Annual Report shows UK Has Frozen £25bn in Russian Assets

On March 21, 2024, the Office of Financial Sanctions Implementation (OFSI) published its annual report for 2023/2024, providing an analytical overview of the UK’s sanctions environment.

The 2023–2024 Annual Review highlights OFSI’s operations, the effects of financial sanctions, its compliance initiatives, and assistance for companies managing UK limitations to promote lawful growth.

The information provided in this annual report further clarifies how UK sanctions are affecting the Russian economic infrastructure.

From the time of the Ukraine invasion, the United Kingdom and its coalition allies have imposed sanctions on Russia that have cost it about $400 billion, which is over four years’ worth of the country’s defense spending.

The report claims that from March 2024, the UK government has sanctioned over 2,001 businesses and individuals under the Russian sanction regime.

These sanctions added to the devaluation of Russian currency in the international markets, which created the shortage of skilled labour in Russian job markets.

UK’s sanctions on Russia has also crippled its economy with surging inflation. This unprecedented inflation increased interest rates, which implied, taking out loans to stabilize the economy would be extremely costly.

As per the OFSI report, Russia’s military ended up relying on rogue nations like North Korea and Iran for technical supplies as an outcome of these UK sanctions.

The complete economic framework of Russia has deteriorated, with the national budget predicted to stay in deficit until at least 2026.

According to the OFSI report, a total of 396 alleged breaches were recorded, with 347 involving Russia, 21 to Libya, 19 involving other regimes, and 9 to Iran.

Even though it took some time to start prosecuting financial organizations that violated Russian sanctions. So far, OFSI has fined two companies in 2024, including International Concierge Services Ltd.  This was from the initial cases where they imposed a financial penalty for a sanction violation.

The report also revealed the imposition of a financial penalty of £465k on Herbert Smith Freehills Moscow, a law firm based in Moscow.

Additional enforcement proceedings are expected in 2025, and these allegations are simply the beginning of a series of cases prompted by Russia’s 2022 invasion of Ukraine.

OFSI has increased its licensing and enforcement resources across the board. The regulatory authority has invested in new technology and initiated unique ways to improve the process of enforcing the Russian sanction regime.

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Given all of these progressive initiatives, the OFSI is finally going to reap the benefits of its years of hard work.  In 2023-24, the OFSI Enforcement team launched several fresh probes.  These fresh investigations have resulted in over threefold the amount of closed investigations compared to the prior year.

A major example of their enforcement actions was the August 2023 ‘Wise disclosure,’ in which they were quick to identify corporations that failed to comply with financial sanctions.

The analysis also highlights OFSI’s recent efforts to stop penalty breaches. Through engagement, enforcement, and improvement to fortify their compliance standards, these new measures are intended to ensure that all parties involved, including financial institutions, strictly comply with these sanctions.

The OFSI now uses its own data and information, together with those given by its partners, to identify sanctions violations rather than relying on people to notify themselves.