Wise Payments Faces Scrutiny from UK Government Over Alleged Breach of Russian Sanctions

Wise Payments Limited (“Wise”), a UK-based financial services provider, is under scrutiny after an investigation by the UK Office of Financial Sanctions Implementation (OFSI) revealed potential violations of sanctions imposed on Russia. The sanctions in question stem from The Russia (Sanctions) EU Exit Regulations 2019 and are aimed at restricting certain Russian individuals, entities, companies, and their subsidiaries from accessing and using their assets. These measures were put in place in response to Russia’s actions, including its annexation of Crimea and its involvement in conflicts in Eastern Ukraine.

The breach in question pertains to a cash withdrawal of £250 made from a Wise business account held by a company owned or controlled by a person designated under the Russia Regulations. In permitting this withdrawal, Wise made funds available to an entity subject to an asset freeze, thereby contravening regulation 12 of the Russia Regulations.

While OFSI classifies breach cases into different categories, it determined that the breach by Wise, while moderately severe, did not warrant the imposition of a monetary penalty. However, OFSI believes that the breach is significant enough to justify a public disclosure, in accordance with section 149(3) of the Policing and Crime Act 2017. This disclosure aims to highlight the breach of financial sanctions legislation.

Wise reportedly self-reported the breach to OFSI and has taken steps to address the aspects of its sanctions compliance process that led to the violation. These mitigating actions include improvements to their sanctions screening and alert review functions, the immediate blocking of both customer accounts and associated cards upon a possible name match with a designated person, and weekend working for the specialist sanctions team.

The breach highlights the importance of effective sanctions risk management and the need for financial institutions to promptly restrict all forms of access to funds or economic resources when sanctions risks are identified. Companies and individuals are obliged to ensure that they do not make funds available to designated persons or entities owned or controlled by designated persons.

This case underscores the regulatory focus on sanctions compliance and the consequences of violations, even when the breach value is relatively low. It serves as a reminder for financial institutions to maintain rigorous sanctions screening processes and alert review functions and to promptly report any potential breaches to the relevant authorities. Voluntary disclosure, as in the case of Wise, may be considered a mitigating factor in OFSI’s assessment of a breach.

Article Credit: https://www.grcreport.com/post/wise-payments-faces-scrutiny-over-alleged-breach-of-russian-sanctions