OFSI has updated its guidance on assessing sanctions breaches to include how it assesses penalties where there has been an incorrect assessment of ownership and control of an entity. The additions to the guidance confirms that OFSI will look at the degree and quality of research and due diligence that the offender has conducted, and will consider it to be a mitigating factor if the determination reached was made in good faith and was a reasonable conclusion to draw. Equally, a failure to carry out appropriate due diligence would be an aggravating factor.
The guidance also helpfully sets out what may be appropriate in terms of due diligence, depending on various factors such as as the risk of the transaction, the contractual and commercial relationships between various parties and the existence of internal policies against which decisions were documented. Any or all of the following factors may be considered as mitigating factors:
- examination of formal ownership and control mechanisms to establish whether there is available evidence of ownership and control by a designated person;
- examination of actual or potential for influence or control by such a person;
- open-source research to establish whether further investigation might be warranted;
- direct contact with the relevant entity to get further information on potential indirect or de facto control, including if appropriate getting commitments from UK persons as to the role of any designated person or a person linked to one; and
- regular checks and monitoring where appropriate.