I tried to make me go to rehab, but they said “No, No, No…”

I was fortunate to be in a room with the great and the good of the sanctions world last week (suffering from the ultimate in imposter syndrome) on the day that the Office of Financial Sanctions Implementation’s (OFSI) first really substantive imposition of a monetary penalty for a breach of the Russia Sanctions (EU Exit) Regulations 2019 (the Russia Regulations) was published.

Hearing the view from industry experts, legal cognoscenti and strategic think tanks at the City & Financial Global Economic Sanctions 2025 on OFSI’s decision to fine Herbert Smith Freehills Moscow (HSF Moscow) nearly £500,00 was, ultimately, as much as it was awe-inspiring (these people have Big Brains), also a salutary reminder of just how vital it is that strict adherence is ensured to a broadly drafted, set of “no”s that are, on any basis, open at least to very broad interpretation.  What great fun for everyone.

Would the position be any different if HSF Moscow were based in Guernsey?  While Guernsey has passed legislation adopting the UK’s Brexit sanctions regulations (including the Russia Regulations) that is not to say that the surrounding legislation is adopted.  Nor is it to say, necessarily, that an identical approach would be taken by Guernsey’s equivalent to OFSI.  General licences, for example, do not take effect here automatically.  And inevitably, an element of Guernsey’s sanctions adherence is based on the fact that everyone knows everyone.  It works, and both industry and government in Guernsey are doing their jobs well.

The HSF Moscow penalty is based on self-reporting of a breach by HSF’s London “parent firm”, and the strict liability imposed under the UK’s regime.  The UK’s Economic Crime (Transparency and Enforcement) Act 2022 (ECA) implements a “strict liability” basis in relation to the imposition of civil monetary penalties. S.146 of the Policing and Crime Act 2017 (PCA) provides OFSI with the power to impose monetary penalties on that strict liability basis.

Neither the ECA nor the PCA extend to Guernsey.  The States of Guernsey has not sought to implement legislation that adopts this strict liability position.  No strict liability?

But.

A United Kingdom person may contravene the Russia Regulations by conduct wholly outside of the United Kingdom.  A United Kingdom person is defined (elsewhere) as including a British citizen – which many Guernsey residents are.  There is facility for His Majesty to order that a United Kingdom person includes a body incorporated in the Channel Islands, but this has not been done.

Might there be appropriate circumstances where OFSI decides to extend its arm of welcome to a Guernsey person (as a British citizen), or might the definition even be extended?

Who knows.

It is generally accepted that our Policy & Resources Committee, and in particular the civil servants within (essentially our equivalent of OFSI) are doing a cracking job, and it would perhaps seem unlikely that there would be any will to usurp and undermine that authority.

But then, a week ago, it seemed pretty unlikely (to me at least) that OFSI would find to be “serious” a case where solicitors self-reported a breach that occurred (in part at least) because of the “hasty closure of HSF Moscow’s Russian Offices” – something that the sanctions regime, at least, appears to encourage.