Sanctions Enforcement: Lessons Learned from 2022 and How to Prepare Going Forward

Key takeaways from Sanctions Enforcement Activity in 2022 and Outlook for 2023:

• In 2022, the US, UK and EU all escalated their sanctions enforcement rhetoric. For example, senior US enforcement officials went so far as to describe sanctions as “the new FCPA” (referring to the US. Foreign Corrupt Practices Act), signaling an expected “sea change” in the intensity with which sanctions violations will be prosecuted.

• Although the UK and EU continue to lag behind the US in pursuing sanctions enforcement actions, legislative and procedural changes in the UK and EU, including the UK’s introduction of strict liability for civil sanctions breaches, will strengthen their respective enforcement regimes going forward. The UK also significantly increased the resources available to its financial and trade sanctions enforcement agencies, which should translate into an uptick in enforcement.

• In addition, enforcement agencies have cooperated at an unprecedented cross-agency and cross-jurisdictional level over the past year. The US Treasury Department’s Office of Foreign Assets Control (“OFAC”) and UK’s Office of Financial Sanctions Implementation (“OFSI”) entered into an “enhanced” partnership, and the touted creation of an EU-wide sanctions body would be a step-change for the EU enforcement regime.

• We anticipate a wave of enforcement activity – across agencies and jurisdictions – will follow the sanctions implemented in the wake of Russia’s invasion of Ukraine last year. Companies in the virtual currency and crypto realm also should expect increasingly aggressive enforcement. 

• As in the realm of anti-corruption compliance, companies should meet the moment with a risk-tailored, best practices approach to sanctions compliance, with programs designed to avoid and/or detect violations and to provide a reasonable basis for negotiation should violations occur notwithstanding best efforts. Companies should take steps now to mitigate the risk of being subject to an enforcement action, including by conducting or refreshing risk assessments (particularly as the sanctions risk landscape has changed significantly over the past year), reviewing and updating compliance policies and procedures, and conducting training of key personnel.