Stacy Keen

The US and UK treasuries already work together to develop common approaches to addressing their shared priorities like cyber threats and the misuse of virtual assets but this agreement is intended to bring their existing collaboration to a new level.

Under the enhanced partnership, the UK Treasury’s Office of Financial Sanctions Implementation (OFSI) and the US Treasury’s Office of Foreign Assets Control (OFAC), will strengthen their working relationship.

In practice, this should mean sharing best practices, identifying opportunities to pool expertise and think creatively about common challenges, exploring opportunities to align the way they implement sanctions, and assisting those impacted by the sanctions regimes, either through joint products or by providing guidance resulting from collaboration behind the scenes.

In a joint statement, OFAC director Andrea Gacki and OFSI director Giles Thomson, said: “Financial sanctions work best when implemented multilaterally. This maximises their impact, minimises unintended consequences, and eases the burden of compliance for business.”

The enforcement agencies also recognised the growing scale of sanctions and the increased complexities of their implementation, and pledged to work closely with affected entities.

“The commitment and willingness of stakeholders to constructively engage with us has been very welcome. We will continue, in close co-ordination with one another, to assist stakeholders via our outreach, by maintaining and updating sanctions-related products to provide useful information and guidance, and by making timely decisions regarding licences,” said Thomson.

The statement also indicated that the OFSI will increase its resource to more than 100 staff by the end of the financial year, and over time the collaboration with OFAC will expand from Russia-related sanctions to include other common sanctions regimes.

Since the UK implemented its autonomous sanctions regimes post-EU departure, it has aligned its financial sanctions regimes with aspects of the US equivalent, with an increasing use of thematic regimes, the issue of general licences authorising certain activities without the need to submit an application, and the introduction of a strict liability test for the imposition of civil penalties.

One area where “UK Persons” would benefit from further alignment is the UK following the US approach of issuing general guidance by way of FAQs and responding to interpretive guidance requests.

In 2022 alone, OFAC issued over 100 FAQs relating to Russian-related sanctions, while the EU has published FAQs concerning its equivalent sanctions regime. To date, the guidance from OFSI, the Foreign, Commonwealth & Development Office, which is responsible for setting the UK’s sanctions policy, and the Department of International Trade’s Export Control Joint Unit, which has responsibility for trade sanctions licensing, has been relatively light on the guidance front when compared to the US and EU.

Comprehensive guidance issued in a timely manner would assist industry and other stakeholders, described by OFSI and OFAC as being “at the forefront of implementing these sanctions”, to navigate the complexities of the sanctions regimes.

Stacy Keen is a senior associate at Pinsent Masons