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State of Financial Crime 2023 Report

OFSI and OFAC Announce “Enhanced Partnership” on Economic Sanctions Implementation and Enforcement

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On October 17, 2022, the UK Treasury’s Office of Financial Sanctions Implementation (OFSI) and the US Treasury Department’s Office of Foreign Assets Control (OFAC) issued a joint statement announcing a new strategy to collaborate further on economic sanctions implementation and enforcement. 

The announcement follows a technical exchange attended by OFSI and OFAC in London on October 13, 2022.

The Enhanced Partnership

The joint statement says that the “enhanced partnership” will build on existing cooperation between OFSI and OFAC, as seen in their coordinated efforts to mitigate cyber threats and the misuse of virtual assets. Specifically, the partnership will see the agencies:

  • Strengthen their working relationships and further exchange best practices
  • Combine their expertise
  • Think creatively about sanctions challenges
  • Align sanctions implementation
  • Better support sanctions compliance through jointly issued guidance and products

The statement also points to broader collaboration with additional global partners to maximize the desired effect of the sanctions, minimize unintended consequences, and ease the burden of business compliance.

Overlapping Regimes

Earlier this year, the UK and the US launched new measures to further clamp down on dirty money in light of Russia’s invasion of Ukraine. On February 28, the UK government introduced the Economic Crime (Transparency and Enforcement) Bill, marking the “most severe package of sanctions ever imposed on Russia or indeed any major economy.” A few days later, on March 2, the US Department of Justice announced the launch of Task Force KleptoCapture to ensure the full effect of sanctions, export restrictions, and economic countermeasures that the US had imposed. Both measures cover the prosecution of entities who try to evade know-your-customer (KYC) and anti-money laundering (AML) measures, including not declaring beneficial ownership. 

Like Task Force KleptoCapture, the National Crime Agency (NCA) established the Combatting Kleptocracy Cell (CKC) in July, focusing on investigations into corrupt elites and politically exposed persons (PEPs) laundering their assets within the UK. The CKC’s focus on taking down money laundering enablers also parallels the ENABLERS Act passed by the US House of Representatives in July. Intended to close existing loopholes used by kleptocrats, the ENABLERS Act extended AML requirements in the Bank Secrecy Act to professional service providers, including accountants and lawyers, third-party payment services, and people who form or register companies or trusts.  

Key Takeaways

Compliance staff should ensure they are familiar with the process OFAC follows within its sanctions regimes, taking note of diverging areas as both agencies seek to align guidance and implementation procedures. Looking forward, compliance teams should prepare for increased sanctions enforcement actions as government resources continue to ramp up and scrutiny on potential sanctions evaders intensifies.


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Originally published 21 October 2022, updated 14 December 2022

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